Correlation Between CEZ A and Southern

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

By analyzing existing cross correlation between CEZ a s and The Southern, you can compare the effects of market volatilities on CEZ A and Southern 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 CEZ A with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ A and Southern.

Diversification Opportunities for CEZ A and Southern

-0.18

Correlation Coefficient

CEZ A  Southern

Good diversification

The 3 months correlation between CEZ and Southern is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CEZ a s and The Southern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and CEZ A 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 CEZ a s are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of CEZ A i.e., CEZ A and Southern go up and down completely randomly.

Pair Corralation between CEZ A and Southern

Assuming the 90 days horizon CEZ a s is expected to generate 1.15 times more return on investment than Southern. However, CEZ A is 1.15 times more volatile than The Southern. It trades about 0.16 of its potential returns per unit of risk. The Southern is currently generating about 0.06 per unit of risk. If you would invest  4,374  in CEZ a s on April 21, 2025 and sell it today you would earn a total of  564.00  from holding CEZ a s or generate 12.89% return on investment over 90 days.

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

CEZ a s  vs.  The Southern

CEZ a s

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ a s are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CEZ A may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Southern

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Southern are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Southern is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CEZ A and Southern

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

The idea behind CEZ a s and The Southern 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.