Correlation Between Personal Group and Prosiebensat

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

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

Diversification Opportunities for Personal Group and Prosiebensat

-0.39

Correlation Coefficient

Personal Group  Prosiebensat

Very good diversification

The 3 months correlation between Personal and Prosiebensat is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Personal Group Holdings 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 Personal Group 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 Personal Group Holdings 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 Personal Group i.e., Personal Group and Prosiebensat go up and down completely randomly.

Pair Corralation between Personal Group and Prosiebensat

Assuming the 90 days trading horizon Personal Group Holdings is expected to generate 0.85 times more return on investment than Prosiebensat. However, Personal Group Holdings is 1.18 times less risky than Prosiebensat. It trades about 0.17 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about 0.04 per unit of risk. If you would invest  15,684  in Personal Group Holdings on September 16, 2024 and sell it today you would earn a total of  4,116  from holding Personal Group Holdings or generate 26.24% return on investment over 90 days.

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

Personal Group Holdings  vs.  Prosiebensat 1 Media

Personal Group Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Personal Group Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Personal Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Personal Group and Prosiebensat

The main advantage of trading using opposite Personal Group and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Personal Group 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 Personal Group Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.