Correlation Between CEZ A and Altius Renewable

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

By analyzing existing cross correlation between CEZ A S and Altius Renewable Royalties, you can compare the effects of market volatilities on CEZ A and Altius Renewable 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 A with a short position of Altius Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ A and Altius Renewable.

Diversification Opportunities for CEZ A and Altius Renewable

-0.36

Correlation Coefficient

CEZ A  Altius Renewable

Very good diversification

The 3 months correlation between CEZ and Altius is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CEZ A S and Altius Renewable Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altius Renewable Roy and CEZ A 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 A S are associated (or correlated) with Altius Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altius Renewable Roy has no effect on the direction of CEZ A i.e., CEZ A and Altius Renewable go up and down completely randomly.

Pair Corralation between CEZ A and Altius Renewable

If you would invest  718.00  in Altius Renewable Royalties on September 3, 2024 and sell it today you would earn a total of  127.00  from holding Altius Renewable Royalties or generate 17.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

CEZ A S  vs.  Altius Renewable Royalties

CEZ A S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEZ A S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CEZ A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Altius Renewable Roy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altius Renewable Royalties are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Altius Renewable reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEZ A and Altius Renewable

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

The idea behind CEZ A S and Altius Renewable Royalties 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.