Correlation Between Intermediate Capital and Prosiebensat

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

By analyzing existing cross correlation between Intermediate Capital Group and Prosiebensat 1 Media, you can compare the effects of market volatilities on Intermediate Capital and Prosiebensat 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 Intermediate Capital with a short position of Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Prosiebensat.

Diversification Opportunities for Intermediate Capital and Prosiebensat

0.15

Correlation Coefficient

Intermediate Capital  Prosiebensat

Average diversification

The 3 months correlation between Intermediate and Prosiebensat is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Prosiebensat go up and down completely randomly.

Pair Corralation between Intermediate Capital and Prosiebensat

Assuming the 90 days trading horizon Intermediate Capital is expected to generate 20.93 times less return on investment than Prosiebensat. But when comparing it to its historical volatility, Intermediate Capital Group is 1.89 times less risky than Prosiebensat. It trades about 0.01 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Prosiebensat 1 Media on September 11, 2024 and sell it today you would earn a total of  42.00  from holding Prosiebensat 1 Media or generate 8.08% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Prosiebensat 1 Media

Intermediate Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Prosiebensat 1 Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prosiebensat 1 Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Prosiebensat may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intermediate Capital and Prosiebensat

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

The idea behind Intermediate Capital Group and Prosiebensat 1 Media 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.