Correlation Between Prosiebensat and XAAR PLC

Can any of the company-specific risk be diversified away by investing in both Prosiebensat and XAAR PLC 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 XAAR PLC 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 XAAR PLC LS 10, you can compare the effects of market volatilities on Prosiebensat and XAAR PLC 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 XAAR PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and XAAR PLC.

Diversification Opportunities for Prosiebensat and XAAR PLC

0.57

Correlation Coefficient

Prosiebensat  XAAR PLC

Very weak diversification

The 3 months correlation between Prosiebensat and XAAR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and XAAR PLC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAAR PLC LS 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 XAAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAAR PLC LS has no effect on the direction of Prosiebensat i.e., Prosiebensat and XAAR PLC go up and down completely randomly.

Pair Corralation between Prosiebensat and XAAR PLC

Assuming the 90 days trading horizon Prosiebensat is expected to generate 5.23 times less return on investment than XAAR PLC. But when comparing it to its historical volatility, Prosiebensat 1 Media is 3.12 times less risky than XAAR PLC. It trades about 0.07 of its potential returns per unit of risk. XAAR PLC LS 10 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  121.00  in XAAR PLC LS 10 on April 22, 2025 and sell it today you would earn a total of  18.00  from holding XAAR PLC LS 10 or generate 14.88% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  XAAR PLC LS 10

Prosiebensat 1 Media

Risk-Adjusted Performance

OK

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 unsteady primary indicators, Prosiebensat unveiled solid returns over the last few months and may actually be approaching a breakup point.

XAAR PLC LS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in XAAR PLC LS 10 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, XAAR PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prosiebensat and XAAR PLC

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

The idea behind Prosiebensat 1 Media and XAAR PLC LS 10 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..