Correlation Between Aferian Plc and ProSiebenSat1 Media

Can any of the company-specific risk be diversified away by investing in both Aferian Plc and ProSiebenSat1 Media 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 Aferian Plc and ProSiebenSat1 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aferian Plc and ProSiebenSat1 Media AG, you can compare the effects of market volatilities on Aferian Plc and ProSiebenSat1 Media 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 Aferian Plc with a short position of ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aferian Plc and ProSiebenSat1 Media.

Diversification Opportunities for Aferian Plc and ProSiebenSat1 Media

0.73

Correlation Coefficient

Aferian Plc  ProSiebenSat1 Media

Poor diversification

The 3 months correlation between Aferian and ProSiebenSat1 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aferian Plc and ProSiebenSat1 Media AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 Media and Aferian Plc 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 Aferian Plc are associated (or correlated) with ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of Aferian Plc i.e., Aferian Plc and ProSiebenSat1 Media go up and down completely randomly.

Pair Corralation between Aferian Plc and ProSiebenSat1 Media

Assuming the 90 days horizon Aferian Plc is expected to under-perform the ProSiebenSat1 Media. In addition to that, Aferian Plc is 2.1 times more volatile than ProSiebenSat1 Media AG. It trades about -0.12 of its total potential returns per unit of risk. ProSiebenSat1 Media AG is currently generating about -0.15 per unit of volatility. If you would invest  162.00  in ProSiebenSat1 Media AG on September 3, 2024 and sell it today you would lose (44.00) from holding ProSiebenSat1 Media AG or give up 27.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Aferian Plc  vs.  ProSiebenSat1 Media AG

Aferian Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aferian Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ProSiebenSat1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProSiebenSat1 Media AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aferian Plc and ProSiebenSat1 Media

The main advantage of trading using opposite Aferian Plc and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aferian Plc position performs unexpectedly, ProSiebenSat1 Media 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.

The idea behind Aferian Plc and ProSiebenSat1 Media AG 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.