Correlation Between Cembra Money and EMS CHEMIE

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

Diversification Opportunities for Cembra Money and EMS CHEMIE

-0.76

Correlation Coefficient

Cembra Money  EMS CHEMIE

Pay attention - limited upside

The 3 months correlation between Cembra and EMS is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and EMS CHEMIE HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMS CHEMIE HOLDING 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 EMS CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMS CHEMIE HOLDING has no effect on the direction of Cembra Money i.e., Cembra Money and EMS CHEMIE go up and down completely randomly.

Pair Corralation between Cembra Money and EMS CHEMIE

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.95 times more return on investment than EMS CHEMIE. However, Cembra Money Bank is 1.05 times less risky than EMS CHEMIE. It trades about 0.04 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about 0.0 per unit of risk. If you would invest  7,122  in Cembra Money Bank on October 11, 2024 and sell it today you would earn a total of  1,498  from holding Cembra Money Bank or generate 21.03% return on investment over 90 days.

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

Cembra Money Bank  vs.  EMS CHEMIE HOLDING AG

Cembra Money Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cembra Money may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EMS CHEMIE HOLDING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMS CHEMIE HOLDING AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Cembra Money and EMS CHEMIE

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

The idea behind Cembra Money Bank and EMS CHEMIE HOLDING AG 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .