Correlation Between CEZ As and Intersport Polska

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

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

Diversification Opportunities for CEZ As and Intersport Polska

0.25

Correlation Coefficient

CEZ As  Intersport Polska

Modest diversification

The 3 months correlation between CEZ and Intersport is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Intersport Polska SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intersport Polska 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 Intersport Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intersport Polska has no effect on the direction of CEZ As i.e., CEZ As and Intersport Polska go up and down completely randomly.

Pair Corralation between CEZ As and Intersport Polska

Assuming the 90 days trading horizon CEZ as is expected to generate 0.28 times more return on investment than Intersport Polska. However, CEZ as is 3.56 times less risky than Intersport Polska. It trades about -0.04 of its potential returns per unit of risk. Intersport Polska SA is currently generating about -0.18 per unit of risk. If you would invest  16,500  in CEZ as on September 27, 2024 and sell it today you would lose (320.00) from holding CEZ as or give up 1.94% of portfolio value over 90 days.

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

CEZ as  vs.  Intersport Polska SA

CEZ as

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 6 (%) 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.

Intersport Polska

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intersport Polska 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.

Pair Trading with CEZ As and Intersport Polska

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

The idea behind CEZ as and Intersport Polska SA 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.