Correlation Between Applied Materials and Cembra Money

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

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

Diversification Opportunities for Applied Materials and Cembra Money

-0.46

Correlation Coefficient

Applied Materials  Cembra Money

Very good diversification

The 3 months correlation between Applied and Cembra is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Cembra Money Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cembra Money Bank and Applied Materials 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 Applied Materials are associated (or correlated) with Cembra Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cembra Money Bank has no effect on the direction of Applied Materials i.e., Applied Materials and Cembra Money go up and down completely randomly.

Pair Corralation between Applied Materials and Cembra Money

Assuming the 90 days trading horizon Applied Materials is expected to under-perform the Cembra Money. In addition to that, Applied Materials is 1.79 times more volatile than Cembra Money Bank. It trades about -0.03 of its total potential returns per unit of risk. Cembra Money Bank is currently generating about 0.24 per unit of volatility. If you would invest  8,154  in Cembra Money Bank on December 25, 2024 and sell it today you would earn a total of  1,729  from holding Cembra Money Bank or generate 21.2% return on investment over 90 days.

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

Applied Materials  vs.  Cembra Money Bank

Applied Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Applied Materials is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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

Pair Trading with Applied Materials and Cembra Money

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

The idea behind Applied Materials and Cembra Money Bank 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 Stocks Directory module to find actively traded stocks across global markets.