Correlation Between ProSiebenSat1 Media and Gray Television

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

Diversification Opportunities for ProSiebenSat1 Media and Gray Television

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between ProSiebenSat1 and Gray is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ProSiebenSat1 Media AG and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television 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 Gray Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gray Television has no effect on the direction of ProSiebenSat1 Media i.e., ProSiebenSat1 Media and Gray Television go up and down completely randomly.

Pair Corralation between ProSiebenSat1 Media and Gray Television

Assuming the 90 days horizon ProSiebenSat1 Media AG is expected to generate 0.67 times more return on investment than Gray Television. However, ProSiebenSat1 Media AG is 1.5 times less risky than Gray Television. It trades about 0.03 of its potential returns per unit of risk. Gray Television is currently generating about 0.01 per unit of risk. If you would invest  138.00  in ProSiebenSat1 Media AG on September 12, 2024 and sell it today you would earn a total of  3.00  from holding ProSiebenSat1 Media AG or generate 2.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.44%
ValuesDaily Returns

ProSiebenSat1 Media AG  vs.  Gray Television

 Performance 
       Timeline  
ProSiebenSat1 Media 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ProSiebenSat1 Media AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, ProSiebenSat1 Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Gray Television 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Gray Television are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gray Television is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ProSiebenSat1 Media and Gray Television Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProSiebenSat1 Media and Gray Television

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

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