Correlation Between Basler Kantonalbank and Cembra Money

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

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

Diversification Opportunities for Basler Kantonalbank and Cembra Money

0.94

Correlation Coefficient

Basler Kantonalbank  Cembra Money

Almost no diversification

The 3 months correlation between Basler and Cembra is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Basler Kantonalbank 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 Basler Kantonalbank 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 Basler 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 Basler Kantonalbank i.e., Basler Kantonalbank and Cembra Money go up and down completely randomly.

Pair Corralation between Basler Kantonalbank and Cembra Money

Assuming the 90 days trading horizon Basler Kantonalbank is expected to generate 1.47 times less return on investment than Cembra Money. But when comparing it to its historical volatility, Basler Kantonalbank is 1.3 times less risky than Cembra Money. It trades about 0.07 of its potential returns per unit of risk. Cembra Money Bank is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,629  in Cembra Money Bank on December 3, 2024 and sell it today you would earn a total of  3,036  from holding Cembra Money Bank or generate 45.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Basler Kantonalbank  vs.  Cembra Money Bank

Basler Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basler Kantonalbank are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Basler Kantonalbank showed solid returns over the last few months and may actually be approaching a breakup point.

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 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cembra Money showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Basler Kantonalbank and Cembra Money

The main advantage of trading using opposite Basler Kantonalbank and Cembra Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basler Kantonalbank 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 Basler 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.