Correlation Between PROSIEBENSAT1 MEDIADR4/ and DATANG INTL

Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ and DATANG INTL 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 PROSIEBENSAT1 MEDIADR4/ and DATANG INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and DATANG INTL POW, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ and DATANG INTL 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 PROSIEBENSAT1 MEDIADR4/ with a short position of DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and DATANG INTL.

Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and DATANG INTL

0.53

Correlation Coefficient

PROSIEBENSAT1 MEDIADR4/  DATANG INTL

Very weak diversification

The 3 months correlation between PROSIEBENSAT1 and DATANG is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and DATANG INTL go up and down completely randomly.

Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and DATANG INTL

Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4/ is expected to generate 3.2 times less return on investment than DATANG INTL. But when comparing it to its historical volatility, PROSIEBENSAT1 MEDIADR4 is 1.39 times less risky than DATANG INTL. It trades about 0.03 of its potential returns per unit of risk. DATANG INTL POW is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  15.00  in DATANG INTL POW on September 15, 2024 and sell it today you would earn a total of  2.00  from holding DATANG INTL POW or generate 13.33% return on investment over 90 days.

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

PROSIEBENSAT1 MEDIADR4  vs.  DATANG INTL POW

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PROSIEBENSAT1 MEDIADR4 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, PROSIEBENSAT1 MEDIADR4/ is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

DATANG INTL POW

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DATANG INTL POW are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DATANG INTL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PROSIEBENSAT1 MEDIADR4/ and DATANG INTL

The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and DATANG INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ position performs unexpectedly, DATANG INTL 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 DATANG INTL will offset losses from the drop in DATANG INTL's long position.

The idea behind PROSIEBENSAT1 MEDIADR4 and DATANG INTL POW 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.