Correlation Between Cembra Money and Vodafone Group

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

By analyzing existing cross correlation between Cembra Money Bank and Vodafone Group PLC, you can compare the effects of market volatilities on Cembra Money and Vodafone Group 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 Cembra Money with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and Vodafone Group.

Diversification Opportunities for Cembra Money and Vodafone Group

-0.57

Correlation Coefficient

Cembra Money  Vodafone Group

Excellent diversification

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

Pair Corralation between Cembra Money and Vodafone Group

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.52 times more return on investment than Vodafone Group. However, Cembra Money Bank is 1.92 times less risky than Vodafone Group. It trades about 0.14 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about -0.11 per unit of risk. If you would invest  7,955  in Cembra Money Bank on October 7, 2024 and sell it today you would earn a total of  425.00  from holding Cembra Money Bank or generate 5.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Cembra Money Bank  vs.  Vodafone Group PLC

Cembra Money Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cembra Money may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Vodafone Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodafone Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cembra Money and Vodafone Group

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

The idea behind Cembra Money Bank and Vodafone Group PLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.