Correlation Between PX Prague and Coloseum Holding

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

By analyzing existing cross correlation between PX Prague Stock and Coloseum Holding as, you can compare the effects of market volatilities on PX Prague and Coloseum Holding 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 PX Prague with a short position of Coloseum Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of PX Prague and Coloseum Holding.

Diversification Opportunities for PX Prague and Coloseum Holding

-0.32

Correlation Coefficient

PX Prague  Coloseum Holding

Very good diversification

The 3 months correlation between PX Prague and Coloseum is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding PX Prague Stock and Coloseum Holding as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloseum Holding and PX Prague 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 PX Prague Stock are associated (or correlated) with Coloseum Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloseum Holding has no effect on the direction of PX Prague i.e., PX Prague and Coloseum Holding go up and down completely randomly.

Pair Corralation between PX Prague and Coloseum Holding

Assuming the 90 days trading horizon PX Prague is expected to generate 4.67 times less return on investment than Coloseum Holding. But when comparing it to its historical volatility, PX Prague Stock is 8.39 times less risky than Coloseum Holding. It trades about 0.08 of its potential returns per unit of risk. Coloseum Holding as is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  14,500  in Coloseum Holding as on March 16, 2024 and sell it today you would earn a total of  1,000.00  from holding Coloseum Holding as or generate 6.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

PX Prague Stock  vs.  Coloseum Holding as

Pair Trading with PX Prague and Coloseum Holding

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

The idea behind PX Prague Stock and Coloseum Holding as 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 Global Correlations module to find global opportunities by holding instruments from different markets.