Correlation Between Cembra Money and VAT Group

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

Diversification Opportunities for Cembra Money and VAT Group

-0.54

Correlation Coefficient

Cembra Money  VAT Group

Excellent diversification

The 3 months correlation between Cembra and VAT is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and VAT Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAT Group AG 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 VAT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAT Group AG has no effect on the direction of Cembra Money i.e., Cembra Money and VAT Group go up and down completely randomly.

Pair Corralation between Cembra Money and VAT Group

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.42 times more return on investment than VAT Group. However, Cembra Money Bank is 2.39 times less risky than VAT Group. It trades about 0.1 of its potential returns per unit of risk. VAT Group AG is currently generating about -0.14 per unit of risk. If you would invest  7,730  in Cembra Money Bank on September 3, 2024 and sell it today you would earn a total of  435.00  from holding Cembra Money Bank or generate 5.63% return on investment over 90 days.

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

Cembra Money Bank  vs.  VAT Group AG

Cembra Money Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 8 (%) 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.

VAT Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VAT Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Cembra Money and VAT Group

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

The idea behind Cembra Money Bank and VAT Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.