Correlation Between Kofola CeskoSlovensko and Cez AS

Can any of the company-specific risk be diversified away by investing in both Kofola CeskoSlovensko 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 Kofola CeskoSlovensko and Cez AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kofola CeskoSlovensko as and Cez AS, you can compare the effects of market volatilities on Kofola CeskoSlovensko 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 Kofola CeskoSlovensko with a short position of Cez AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kofola CeskoSlovensko and Cez AS.

Diversification Opportunities for Kofola CeskoSlovensko and Cez AS

0.62

Correlation Coefficient

Kofola CeskoSlovensko  Cez AS

Poor diversification

The 3 months correlation between Kofola and Cez is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kofola CeskoSlovensko as and Cez AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cez AS and Kofola CeskoSlovensko 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 Kofola CeskoSlovensko as 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 Kofola CeskoSlovensko i.e., Kofola CeskoSlovensko and Cez AS go up and down completely randomly.

Pair Corralation between Kofola CeskoSlovensko and Cez AS

Assuming the 90 days trading horizon Kofola CeskoSlovensko as is expected to generate 0.83 times more return on investment than Cez AS. However, Kofola CeskoSlovensko as is 1.2 times less risky than Cez AS. It trades about 0.32 of its potential returns per unit of risk. Cez AS is currently generating about 0.06 per unit of risk. If you would invest  37,700  in Kofola CeskoSlovensko as on November 28, 2024 and sell it today you would earn a total of  7,500  from holding Kofola CeskoSlovensko as or generate 19.89% return on investment over 90 days.

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

Kofola CeskoSlovensko as  vs.  Cez AS

Kofola CeskoSlovensko

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kofola CeskoSlovensko as are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Kofola CeskoSlovensko reported solid returns over the last few months and may actually be approaching a breakup point.

Cez AS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cez AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Cez AS is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kofola CeskoSlovensko and Cez AS

The main advantage of trading using opposite Kofola CeskoSlovensko and Cez AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kofola CeskoSlovensko 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 Kofola CeskoSlovensko as 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.