Correlation Between Prosiebensat and USWE SPORTS

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

Diversification Opportunities for Prosiebensat and USWE SPORTS

-0.9

Correlation Coefficient

Prosiebensat  USWE SPORTS

Pay attention - limited upside

The 3 months correlation between Prosiebensat and USWE is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of Prosiebensat i.e., Prosiebensat and USWE SPORTS go up and down completely randomly.

Pair Corralation between Prosiebensat and USWE SPORTS

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to generate 1.68 times more return on investment than USWE SPORTS. However, Prosiebensat is 1.68 times more volatile than USWE SPORTS AB. It trades about 0.16 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about -0.06 per unit of risk. If you would invest  471.00  in Prosiebensat 1 Media on October 4, 2024 and sell it today you would earn a total of  48.00  from holding Prosiebensat 1 Media or generate 10.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Prosiebensat 1 Media  vs.  USWE SPORTS AB

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

USWE SPORTS AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prosiebensat and USWE SPORTS

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

The idea behind Prosiebensat 1 Media and USWE SPORTS AB 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.