Correlation Between Prosiebensat and TIANDE CHEMICAL

Can any of the company-specific risk be diversified away by investing in both Prosiebensat and TIANDE CHEMICAL 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 TIANDE CHEMICAL 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 TIANDE CHEMICAL, you can compare the effects of market volatilities on Prosiebensat and TIANDE CHEMICAL 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 TIANDE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and TIANDE CHEMICAL.

Diversification Opportunities for Prosiebensat and TIANDE CHEMICAL

-0.5

Correlation Coefficient

Prosiebensat  TIANDE CHEMICAL

Very good diversification

The 3 months correlation between Prosiebensat and TIANDE is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and TIANDE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANDE CHEMICAL 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 TIANDE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANDE CHEMICAL has no effect on the direction of Prosiebensat i.e., Prosiebensat and TIANDE CHEMICAL go up and down completely randomly.

Pair Corralation between Prosiebensat and TIANDE CHEMICAL

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the TIANDE CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, Prosiebensat 1 Media is 1.89 times less risky than TIANDE CHEMICAL. The stock trades about -0.08 of its potential returns per unit of risk. The TIANDE CHEMICAL is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5.25  in TIANDE CHEMICAL on September 28, 2024 and sell it today you would earn a total of  2.00  from holding TIANDE CHEMICAL or generate 38.1% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  TIANDE CHEMICAL

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 fragile performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TIANDE CHEMICAL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TIANDE CHEMICAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, TIANDE CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prosiebensat and TIANDE CHEMICAL

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

The idea behind Prosiebensat 1 Media and TIANDE CHEMICAL 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.