Correlation Between Prosiebensat and Sparebank

Can any of the company-specific risk be diversified away by investing in both Prosiebensat and Sparebank 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 Sparebank 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 Sparebank 1 SR, you can compare the effects of market volatilities on Prosiebensat and Sparebank 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 Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Sparebank.

Diversification Opportunities for Prosiebensat and Sparebank

-0.45

Correlation Coefficient

Prosiebensat  Sparebank

Very good diversification

The 3 months correlation between Prosiebensat and Sparebank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Prosiebensat i.e., Prosiebensat and Sparebank go up and down completely randomly.

Pair Corralation between Prosiebensat and Sparebank

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the Sparebank. In addition to that, Prosiebensat is 2.54 times more volatile than Sparebank 1 SR. It trades about -0.08 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.1 per unit of volatility. If you would invest  13,530  in Sparebank 1 SR on September 27, 2024 and sell it today you would earn a total of  910.00  from holding Sparebank 1 SR or generate 6.73% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  Sparebank 1 SR

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 uncertain performance in the last few months, the Stock's basic 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.

Sparebank 1 SR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebank 1 SR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Prosiebensat and Sparebank

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

The idea behind Prosiebensat 1 Media and Sparebank 1 SR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.