Correlation Between European Equity and CBH

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

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

Diversification Opportunities for European Equity and CBH

-0.86

Correlation Coefficient

European Equity  CBH

Pay attention - limited upside

The 3 months correlation between European and CBH is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and European Equity 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 European Equity Closed are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of European Equity i.e., European Equity and CBH go up and down completely randomly.

Pair Corralation between European Equity and CBH

If you would invest  919.00  in CBH on September 25, 2024 and sell it today you would earn a total of  0.00  from holding CBH or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

European Equity Closed  vs.  CBH

European Equity Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Equity Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with European Equity and CBH

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

The idea behind European Equity Closed and CBH 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.