Correlation Between Cembra Money and Vontobel Holding

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

Diversification Opportunities for Cembra Money and Vontobel Holding

-0.24

Correlation Coefficient

Cembra Money  Vontobel Holding

Very good diversification

The 3 months correlation between Cembra and Vontobel is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and Vontobel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontobel 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 Vontobel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontobel Holding has no effect on the direction of Cembra Money i.e., Cembra Money and Vontobel Holding go up and down completely randomly.

Pair Corralation between Cembra Money and Vontobel Holding

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.73 times more return on investment than Vontobel Holding. However, Cembra Money Bank is 1.37 times less risky than Vontobel Holding. It trades about 0.33 of its potential returns per unit of risk. Vontobel Holding is currently generating about 0.03 per unit of risk. If you would invest  8,200  in Cembra Money Bank on December 29, 2024 and sell it today you would earn a total of  1,785  from holding Cembra Money Bank or generate 21.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Cembra Money Bank  vs.  Vontobel Holding

Cembra Money Bank

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 26 (%) 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.

Vontobel Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vontobel Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vontobel Holding is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cembra Money and Vontobel Holding

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

The idea behind Cembra Money Bank and Vontobel Holding 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.