Correlation Between ProSiebenSat1 Media and FIREWEED METALS

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

By analyzing existing cross correlation between ProSiebenSat1 Media SE and FIREWEED METALS P, you can compare the effects of market volatilities on ProSiebenSat1 Media and FIREWEED METALS 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 FIREWEED METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProSiebenSat1 Media and FIREWEED METALS.

Diversification Opportunities for ProSiebenSat1 Media and FIREWEED METALS

0.28

Correlation Coefficient

ProSiebenSat1 Media  FIREWEED METALS

Modest diversification

The 3 months correlation between ProSiebenSat1 and FIREWEED is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ProSiebenSat1 Media SE and FIREWEED METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIREWEED METALS P 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 SE are associated (or correlated) with FIREWEED METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIREWEED METALS P has no effect on the direction of ProSiebenSat1 Media i.e., ProSiebenSat1 Media and FIREWEED METALS go up and down completely randomly.

Pair Corralation between ProSiebenSat1 Media and FIREWEED METALS

Assuming the 90 days horizon ProSiebenSat1 Media is expected to generate 1.96 times less return on investment than FIREWEED METALS. But when comparing it to its historical volatility, ProSiebenSat1 Media SE is 1.16 times less risky than FIREWEED METALS. It trades about 0.15 of its potential returns per unit of risk. FIREWEED METALS P is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  93.00  in FIREWEED METALS P on October 27, 2024 and sell it today you would earn a total of  11.00  from holding FIREWEED METALS P or generate 11.83% return on investment over 90 days.

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

ProSiebenSat1 Media SE  vs.  FIREWEED METALS P

ProSiebenSat1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProSiebenSat1 Media SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

FIREWEED METALS P

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIREWEED METALS P are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIREWEED METALS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ProSiebenSat1 Media and FIREWEED METALS

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

The idea behind ProSiebenSat1 Media SE and FIREWEED METALS P 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.