Correlation Between Cez AS and EMan As

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

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

Diversification Opportunities for Cez AS and EMan As

-0.73

Correlation Coefficient

Cez AS  EMan As

Pay attention - limited upside

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

Pair Corralation between Cez AS and EMan As

Assuming the 90 days trading horizon Cez AS is expected to generate 0.23 times more return on investment than EMan As. However, Cez AS is 4.27 times less risky than EMan As. It trades about 0.2 of its potential returns per unit of risk. eMan as is currently generating about -0.09 per unit of risk. If you would invest  86,500  in Cez AS on September 2, 2024 and sell it today you would earn a total of  9,650  from holding Cez AS or generate 11.16% return on investment over 90 days.

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

Cez AS  vs.  eMan as

Cez AS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cez AS are ranked lower than 15 (%) 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.

eMan as

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eMan as 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.

Pair Trading with Cez AS and EMan As

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

The idea behind Cez AS and eMan 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.