Correlation Between Prosiebensat and Ambev SA

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

Diversification Opportunities for Prosiebensat and Ambev SA

0.5

Correlation Coefficient

Prosiebensat  Ambev SA

Very weak diversification

The 3 months correlation between Prosiebensat and Ambev is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of Prosiebensat i.e., Prosiebensat and Ambev SA go up and down completely randomly.

Pair Corralation between Prosiebensat and Ambev SA

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to generate 1.23 times more return on investment than Ambev SA. However, Prosiebensat is 1.23 times more volatile than Ambev SA. It trades about 0.09 of its potential returns per unit of risk. Ambev SA is currently generating about 0.01 per unit of risk. If you would invest  475.00  in Prosiebensat 1 Media on September 26, 2024 and sell it today you would earn a total of  26.00  from holding Prosiebensat 1 Media or generate 5.47% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  Ambev SA

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ambev SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambev SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ambev SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Prosiebensat and Ambev SA

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

The idea behind Prosiebensat 1 Media and Ambev SA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.