Correlation Between CeoTronics and MBANK

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

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

Diversification Opportunities for CeoTronics and MBANK

0.79

Correlation Coefficient

CeoTronics  MBANK

Poor diversification

The 3 months correlation between CeoTronics and MBANK is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK and CeoTronics 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 CeoTronics AG are associated (or correlated) with MBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK has no effect on the direction of CeoTronics i.e., CeoTronics and MBANK go up and down completely randomly.

Pair Corralation between CeoTronics and MBANK

Assuming the 90 days trading horizon CeoTronics AG is expected to generate 1.95 times more return on investment than MBANK. However, CeoTronics is 1.95 times more volatile than MBANK. It trades about 0.21 of its potential returns per unit of risk. MBANK is currently generating about 0.31 per unit of risk. If you would invest  580.00  in CeoTronics AG on December 24, 2024 and sell it today you would earn a total of  410.00  from holding CeoTronics AG or generate 70.69% return on investment over 90 days.

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

CeoTronics AG  vs.  MBANK

CeoTronics AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

MBANK

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MBANK are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MBANK unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CeoTronics and MBANK

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

The idea behind CeoTronics AG and MBANK 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.