Correlation Between Prosiebensat and FOX P

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

Diversification Opportunities for Prosiebensat and FOX P

-0.76

Correlation Coefficient

Prosiebensat  FOX P

Pay attention - limited upside

The 3 months correlation between Prosiebensat and FOX is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and FOX P B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOX P B 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 FOX P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOX P B has no effect on the direction of Prosiebensat i.e., Prosiebensat and FOX P go up and down completely randomly.

Pair Corralation between Prosiebensat and FOX P

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the FOX P. In addition to that, Prosiebensat is 1.33 times more volatile than FOX P B. It trades about -0.11 of its total potential returns per unit of risk. FOX P B is currently generating about 0.24 per unit of volatility. If you would invest  3,520  in FOX P B on September 23, 2024 and sell it today you would earn a total of  860.00  from holding FOX P B or generate 24.43% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  FOX P B

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 latest fragile performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FOX P B

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FOX P B are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FOX P reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prosiebensat and FOX P

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

The idea behind Prosiebensat 1 Media and FOX P B 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.