Correlation Between Colt CZ and Cez AS

Can any of the company-specific risk be diversified away by investing in both Colt CZ and Cez AS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Colt CZ and Cez AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Colt CZ Group and Cez AS, you can compare the effects of market volatilities on Colt CZ and Cez AS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Colt CZ with a short position of Cez AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colt CZ and Cez AS.

Diversification Opportunities for Colt CZ and Cez AS

0.44

Correlation Coefficient

Colt CZ  Cez AS

Very weak diversification

The 3 months correlation between Colt and Cez is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Colt CZ Group and Cez AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cez AS and Colt CZ is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Colt CZ Group are associated (or correlated) with Cez AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cez AS has no effect on the direction of Colt CZ i.e., Colt CZ and Cez AS go up and down completely randomly.

Pair Corralation between Colt CZ and Cez AS

Assuming the 90 days trading horizon Colt CZ is expected to generate 1.43 times less return on investment than Cez AS. But when comparing it to its historical volatility, Colt CZ Group is 1.22 times less risky than Cez AS. It trades about 0.19 of its potential returns per unit of risk. Cez AS is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  95,700  in Cez AS on December 28, 2024 and sell it today you would earn a total of  17,000  from holding Cez AS or generate 17.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Colt CZ Group  vs.  Cez AS

Colt CZ Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Colt CZ Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Colt CZ may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cez AS

Risk-Adjusted Performance

Solid

Over the last 90 days Cez AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Cez AS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Colt CZ and Cez AS

The main advantage of trading using opposite Colt CZ and Cez AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colt CZ position performs unexpectedly, Cez AS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cez AS will offset losses from the drop in Cez AS's long position.

The idea behind Colt CZ Group and Cez AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.