Correlation Between Basellandschaftliche and Cembra Money

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

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

Diversification Opportunities for Basellandschaftliche and Cembra Money

0.61

Correlation Coefficient

Basellandschaftliche  Cembra Money

Poor diversification

The 3 months correlation between Basellandschaftliche and Cembra is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Basellandschaftliche Kantonalb 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 Basellandschaftliche 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 Basellandschaftliche Kantonalbank 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 Basellandschaftliche i.e., Basellandschaftliche and Cembra Money go up and down completely randomly.

Pair Corralation between Basellandschaftliche and Cembra Money

Assuming the 90 days trading horizon Basellandschaftliche Kantonalbank is expected to generate 0.56 times more return on investment than Cembra Money. However, Basellandschaftliche Kantonalbank is 1.79 times less risky than Cembra Money. It trades about 0.17 of its potential returns per unit of risk. Cembra Money Bank is currently generating about 0.04 per unit of risk. If you would invest  84,800  in Basellandschaftliche Kantonalbank on September 28, 2024 and sell it today you would earn a total of  1,600  from holding Basellandschaftliche Kantonalbank or generate 1.89% return on investment over 90 days.

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

Basellandschaftliche Kantonalb  vs.  Cembra Money Bank

Basellandschaftliche

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Basellandschaftliche Kantonalbank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Basellandschaftliche is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cembra Money Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Cembra Money is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Basellandschaftliche and Cembra Money

The main advantage of trading using opposite Basellandschaftliche and Cembra Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basellandschaftliche 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 Basellandschaftliche Kantonalbank 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.