Correlation Between Helvetia Holding and Cembra Money

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

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

Diversification Opportunities for Helvetia Holding and Cembra Money

0.65

Correlation Coefficient

Helvetia Holding  Cembra Money

Poor diversification

The 3 months correlation between Helvetia and Cembra is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Helvetia Holding AG and Cembra Money Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cembra Money Bank and Helvetia Holding 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 Helvetia Holding AG are associated (or correlated) with Cembra Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cembra Money Bank has no effect on the direction of Helvetia Holding i.e., Helvetia Holding and Cembra Money go up and down completely randomly.

Pair Corralation between Helvetia Holding and Cembra Money

Assuming the 90 days trading horizon Helvetia Holding AG is expected to generate 1.28 times more return on investment than Cembra Money. However, Helvetia Holding is 1.28 times more volatile than Cembra Money Bank. It trades about 0.21 of its potential returns per unit of risk. Cembra Money Bank is currently generating about 0.12 per unit of risk. If you would invest  13,240  in Helvetia Holding AG on September 4, 2024 and sell it today you would earn a total of  2,050  from holding Helvetia Holding AG or generate 15.48% return on investment over 90 days.

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

Helvetia Holding AG  vs.  Cembra Money Bank

Helvetia Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Helvetia Holding AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Helvetia Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Cembra Money Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 9 (%) 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 January 2025.

Pair Trading with Helvetia Holding and Cembra Money

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

The idea behind Helvetia Holding AG and Cembra Money Bank 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.