Correlation Between Cembra Money and Futura Medical

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

Diversification Opportunities for Cembra Money and Futura Medical

-0.41

Correlation Coefficient

Cembra Money  Futura Medical

Very good diversification

The 3 months correlation between Cembra and Futura is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Cembra Money i.e., Cembra Money and Futura Medical go up and down completely randomly.

Pair Corralation between Cembra Money and Futura Medical

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 1.23 times more return on investment than Futura Medical. However, Cembra Money is 1.23 times more volatile than Futura Medical. It trades about 0.03 of its potential returns per unit of risk. Futura Medical is currently generating about -0.44 per unit of risk. If you would invest  8,360  in Cembra Money Bank on October 9, 2024 and sell it today you would earn a total of  36.00  from holding Cembra Money Bank or generate 0.43% return on investment over 90 days.

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

Cembra Money Bank  vs.  Futura Medical

Cembra Money Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 9 (%) 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.

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Futura Medical is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cembra Money and Futura Medical

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

The idea behind Cembra Money Bank and Futura Medical 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..