Correlation Between Gray Television and ProSiebenSat1 Media

Can any of the company-specific risk be diversified away by investing in both Gray Television and ProSiebenSat1 Media 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 Gray Television and ProSiebenSat1 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gray Television and ProSiebenSat1 Media AG, you can compare the effects of market volatilities on Gray Television and ProSiebenSat1 Media 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 Gray Television with a short position of ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gray Television and ProSiebenSat1 Media.

Diversification Opportunities for Gray Television and ProSiebenSat1 Media

0.82

Correlation Coefficient

Gray Television  ProSiebenSat1 Media

Very poor diversification

The 3 months correlation between Gray and ProSiebenSat1 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and ProSiebenSat1 Media AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 Media and Gray Television 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 Gray Television are associated (or correlated) with ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of Gray Television i.e., Gray Television and ProSiebenSat1 Media go up and down completely randomly.

Pair Corralation between Gray Television and ProSiebenSat1 Media

Considering the 90-day investment horizon Gray Television is expected to generate 1.21 times more return on investment than ProSiebenSat1 Media. However, Gray Television is 1.21 times more volatile than ProSiebenSat1 Media AG. It trades about 0.18 of its potential returns per unit of risk. ProSiebenSat1 Media AG is currently generating about 0.1 per unit of risk. If you would invest  291.00  in Gray Television on December 30, 2024 and sell it today you would earn a total of  140.00  from holding Gray Television or generate 48.11% return on investment over 90 days.

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

Gray Television  vs.  ProSiebenSat1 Media AG

Gray Television

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gray Television are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Gray Television displayed solid returns over the last few months and may actually be approaching a breakup point.

ProSiebenSat1 Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProSiebenSat1 Media AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, ProSiebenSat1 Media showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gray Television and ProSiebenSat1 Media

The main advantage of trading using opposite Gray Television and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gray Television position performs unexpectedly, ProSiebenSat1 Media 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.

The idea behind Gray Television and ProSiebenSat1 Media AG 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.