Correlation Between Prosiebensat and Anheuser Busch

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

By analyzing existing cross correlation between Prosiebensat 1 Media and Anheuser Busch InBev SANV, you can compare the effects of market volatilities on Prosiebensat and Anheuser Busch 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 Prosiebensat with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Anheuser Busch.

Diversification Opportunities for Prosiebensat and Anheuser Busch

0.8

Correlation Coefficient

Prosiebensat  Anheuser Busch

Very poor diversification

The 3 months correlation between Prosiebensat and Anheuser is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and Anheuser Busch InBev SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch InBev and Prosiebensat 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 Prosiebensat 1 Media are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch InBev has no effect on the direction of Prosiebensat i.e., Prosiebensat and Anheuser Busch go up and down completely randomly.

Pair Corralation between Prosiebensat and Anheuser Busch

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to generate 2.0 times more return on investment than Anheuser Busch. However, Prosiebensat is 2.0 times more volatile than Anheuser Busch InBev SANV. It trades about 0.04 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about -0.15 per unit of risk. If you would invest  528.00  in Prosiebensat 1 Media on September 16, 2024 and sell it today you would earn a total of  29.00  from holding Prosiebensat 1 Media or generate 5.49% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  Anheuser Busch InBev SANV

Prosiebensat 1 Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prosiebensat 1 Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Prosiebensat may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anheuser Busch InBev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch InBev SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Prosiebensat and Anheuser Busch

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

The idea behind Prosiebensat 1 Media and Anheuser Busch InBev SANV 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.