Correlation Between Made Tech and Cembra Money

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

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

Diversification Opportunities for Made Tech and Cembra Money

0.85

Correlation Coefficient

Made Tech  Cembra Money

Very poor diversification

The 3 months correlation between Made and Cembra is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech Group 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 Made Tech 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 Made Tech Group 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 Made Tech i.e., Made Tech and Cembra Money go up and down completely randomly.

Pair Corralation between Made Tech and Cembra Money

Assuming the 90 days trading horizon Made Tech Group is expected to generate 3.32 times more return on investment than Cembra Money. However, Made Tech is 3.32 times more volatile than Cembra Money Bank. It trades about 0.02 of its potential returns per unit of risk. Cembra Money Bank is currently generating about 0.04 per unit of risk. If you would invest  2,800  in Made Tech Group on September 28, 2024 and sell it today you would lose (300.00) from holding Made Tech Group or give up 10.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.43%
Values	Daily Returns

Made Tech Group  vs.  Cembra Money Bank

Made Tech Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cembra Money Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cembra Money is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Made Tech and Cembra Money

The main advantage of trading using opposite Made Tech and Cembra Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Made Tech 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 Made Tech Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.