Correlation Between ProSiebenSat1 Media and TV Azteca

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

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

Diversification Opportunities for ProSiebenSat1 Media and TV Azteca

0.24

Correlation Coefficient

ProSiebenSat1 Media  TV Azteca

Modest diversification

The 3 months correlation between ProSiebenSat1 and AZTEF is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ProSiebenSat1 Media AG and TV Azteca SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TV Azteca SAB and ProSiebenSat1 Media 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 ProSiebenSat1 Media AG are associated (or correlated) with TV Azteca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TV Azteca SAB has no effect on the direction of ProSiebenSat1 Media i.e., ProSiebenSat1 Media and TV Azteca go up and down completely randomly.

Pair Corralation between ProSiebenSat1 Media and TV Azteca

Assuming the 90 days horizon ProSiebenSat1 Media is expected to generate 34.19 times less return on investment than TV Azteca. But when comparing it to its historical volatility, ProSiebenSat1 Media AG is 44.18 times less risky than TV Azteca. It trades about 0.15 of its potential returns per unit of risk. TV Azteca SAB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.02  in TV Azteca SAB on December 1, 2024 and sell it today you would earn a total of  0.01  from holding TV Azteca SAB or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

ProSiebenSat1 Media AG  vs.  TV Azteca SAB

ProSiebenSat1 Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProSiebenSat1 Media AG are ranked lower than 11 (%) 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.

TV Azteca SAB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TV Azteca SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, TV Azteca reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProSiebenSat1 Media and TV Azteca

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

The idea behind ProSiebenSat1 Media AG and TV Azteca SAB 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.