Correlation Between ProSiebenSat1 Media and Emmis Communications

Can any of the company-specific risk be diversified away by investing in both ProSiebenSat1 Media and Emmis Communications 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 Emmis Communications 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 Emmis Communications Corp, you can compare the effects of market volatilities on ProSiebenSat1 Media and Emmis Communications 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 Emmis Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProSiebenSat1 Media and Emmis Communications.

Diversification Opportunities for ProSiebenSat1 Media and Emmis Communications

0.15

Correlation Coefficient

ProSiebenSat1 Media  Emmis Communications

Average diversification

The 3 months correlation between ProSiebenSat1 and Emmis is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ProSiebenSat1 Media AG and Emmis Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmis Communications Corp 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 Emmis Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmis Communications Corp has no effect on the direction of ProSiebenSat1 Media i.e., ProSiebenSat1 Media and Emmis Communications go up and down completely randomly.

Pair Corralation between ProSiebenSat1 Media and Emmis Communications

If you would invest  390.00  in Emmis Communications Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Emmis Communications Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

ProSiebenSat1 Media AG  vs.  Emmis Communications Corp

ProSiebenSat1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProSiebenSat1 Media AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Emmis Communications Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emmis Communications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Emmis Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProSiebenSat1 Media and Emmis Communications

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

The idea behind ProSiebenSat1 Media AG and Emmis Communications Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.