Correlation Between Cembra Money and CAP LEASE

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

Diversification Opportunities for Cembra Money and CAP LEASE

-0.74

Correlation Coefficient

Cembra Money  CAP LEASE

Pay attention - limited upside

The 3 months correlation between Cembra and CAP is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION 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 CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Cembra Money i.e., Cembra Money and CAP LEASE go up and down completely randomly.

Pair Corralation between Cembra Money and CAP LEASE

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.53 times more return on investment than CAP LEASE. However, Cembra Money Bank is 1.88 times less risky than CAP LEASE. It trades about 0.13 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.15 per unit of risk. If you would invest  7,775  in Cembra Money Bank on October 7, 2024 and sell it today you would earn a total of  605.00  from holding Cembra Money Bank or generate 7.78% return on investment over 90 days.

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

Cembra Money Bank  vs.  CAP LEASE AVIATION

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.

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cembra Money and CAP LEASE

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

The idea behind Cembra Money Bank and CAP LEASE AVIATION 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.