Correlation Between Prosiebensat and Townsquare Media

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

Diversification Opportunities for Prosiebensat and Townsquare Media

0.5
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between Prosiebensat and Townsquare Media

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to generate 0.91 times more return on investment than Townsquare Media. However, Prosiebensat 1 Media is 1.09 times less risky than Townsquare Media. It trades about 0.12 of its potential returns per unit of risk. Townsquare Media is currently generating about 0.06 per unit of risk. If you would invest  600.00  in Prosiebensat 1 Media on April 24, 2025 and sell it today you would earn a total of  121.00  from holding Prosiebensat 1 Media or generate 20.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Prosiebensat 1 Media  vs.  Townsquare Media

 Performance 
       Timeline  
Prosiebensat 1 Media 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Prosiebensat 1 Media are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Prosiebensat unveiled solid returns over the last few months and may actually be approaching a breakup point.
Townsquare Media 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Townsquare Media may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Prosiebensat and Townsquare Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Prosiebensat and Townsquare Media

The main advantage of trading using opposite Prosiebensat and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat position performs unexpectedly, Townsquare Media 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 Townsquare Media will offset losses from the drop in Townsquare Media's long position.
The idea behind Prosiebensat 1 Media and Townsquare Media 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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