Correlation Between Prosiebensat and ResMed

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

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

Diversification Opportunities for Prosiebensat and ResMed

-0.7

Correlation Coefficient

Prosiebensat  ResMed

Excellent diversification

The 3 months correlation between Prosiebensat and ResMed is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and Prosiebensat 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 Prosiebensat 1 Media are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of Prosiebensat i.e., Prosiebensat and ResMed go up and down completely randomly.

Pair Corralation between Prosiebensat and ResMed

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the ResMed. In addition to that, Prosiebensat is 1.55 times more volatile than ResMed Inc. It trades about -0.07 of its total potential returns per unit of risk. ResMed Inc is currently generating about 0.03 per unit of volatility. If you would invest  21,639  in ResMed Inc on September 25, 2024 and sell it today you would earn a total of  581.00  from holding ResMed Inc or generate 2.68% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  ResMed Inc

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ResMed Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ResMed is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Prosiebensat and ResMed

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

The idea behind Prosiebensat 1 Media and ResMed Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.