Correlation Between Stalprodukt and CEZ As

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

By analyzing existing cross correlation between Stalprodukt SA and CEZ as, you can compare the effects of market volatilities on Stalprodukt and CEZ As 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 Stalprodukt with a short position of CEZ As. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stalprodukt and CEZ As.

Diversification Opportunities for Stalprodukt and CEZ As

-0.83

Correlation Coefficient

Stalprodukt  CEZ As

Pay attention - limited upside

The 3 months correlation between Stalprodukt and CEZ is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Stalprodukt SA and CEZ as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ as and Stalprodukt 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 Stalprodukt SA are associated (or correlated) with CEZ As. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ as has no effect on the direction of Stalprodukt i.e., Stalprodukt and CEZ As go up and down completely randomly.

Pair Corralation between Stalprodukt and CEZ As

Assuming the 90 days trading horizon Stalprodukt SA is expected to generate 0.35 times more return on investment than CEZ As. However, Stalprodukt SA is 2.82 times less risky than CEZ As. It trades about -0.07 of its potential returns per unit of risk. CEZ as is currently generating about -0.04 per unit of risk. If you would invest  21,950  in Stalprodukt SA on September 24, 2024 and sell it today you would lose (250.00) from holding Stalprodukt SA or give up 1.14% of portfolio value over 90 days.

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

Stalprodukt SA  vs.  CEZ as

Stalprodukt SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stalprodukt SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

CEZ as

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CEZ As may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stalprodukt and CEZ As

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

The idea behind Stalprodukt SA and CEZ as 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 CEOs Directory module to screen CEOs from public companies around the world.