Correlation Between Cembra Money and Endeavour Mining

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

Diversification Opportunities for Cembra Money and Endeavour Mining

0.73

Correlation Coefficient

Cembra Money  Endeavour Mining

Poor diversification

The 3 months correlation between Cembra and Endeavour is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp 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 Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Cembra Money i.e., Cembra Money and Endeavour Mining go up and down completely randomly.

Pair Corralation between Cembra Money and Endeavour Mining

Assuming the 90 days trading horizon Cembra Money is expected to generate 1.08 times less return on investment than Endeavour Mining. But when comparing it to its historical volatility, Cembra Money Bank is 1.63 times less risky than Endeavour Mining. It trades about 0.23 of its potential returns per unit of risk. Endeavour Mining Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  143,200  in Endeavour Mining Corp on December 24, 2024 and sell it today you would earn a total of  31,600  from holding Endeavour Mining Corp or generate 22.07% return on investment over 90 days.

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

Cembra Money Bank  vs.  Endeavour Mining Corp

Cembra Money Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cembra Money unveiled solid returns over the last few months and may actually be approaching a breakup point.

Endeavour Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Endeavour Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cembra Money and Endeavour Mining

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

The idea behind Cembra Money Bank and Endeavour Mining Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.