Correlation Between CM AM and BerolinaCapital Premium

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Can any of the company-specific risk be diversified away by investing in both CM AM and BerolinaCapital Premium 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 CM AM and BerolinaCapital Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CM AM Monplus NE and BerolinaCapital Premium, you can compare the effects of market volatilities on CM AM and BerolinaCapital Premium 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 CM AM with a short position of BerolinaCapital Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM AM and BerolinaCapital Premium.

Diversification Opportunities for CM AM and BerolinaCapital Premium

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between 0P0001F96C and BerolinaCapital is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding CM AM Monplus NE and BerolinaCapital Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BerolinaCapital Premium and CM AM 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 CM AM Monplus NE are associated (or correlated) with BerolinaCapital Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BerolinaCapital Premium has no effect on the direction of CM AM i.e., CM AM and BerolinaCapital Premium go up and down completely randomly.

Pair Corralation between CM AM and BerolinaCapital Premium

Assuming the 90 days trading horizon CM AM is expected to generate 3.1 times less return on investment than BerolinaCapital Premium. But when comparing it to its historical volatility, CM AM Monplus NE is 116.16 times less risky than BerolinaCapital Premium. It trades about 1.17 of its potential returns per unit of risk. BerolinaCapital Premium is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,087  in BerolinaCapital Premium on August 30, 2024 and sell it today you would earn a total of  59.00  from holding BerolinaCapital Premium or generate 0.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.65%
ValuesDaily Returns

CM AM Monplus NE  vs.  BerolinaCapital Premium

 Performance 
       Timeline  
CM AM Monplus 

Risk-Adjusted Performance

96 of 100

 
Weak
 
Strong
Market Crasher
Compared to the overall equity markets, risk-adjusted returns on investments in CM AM Monplus NE are ranked lower than 96 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, CM AM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
BerolinaCapital Premium 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in BerolinaCapital Premium are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable fundamental indicators, BerolinaCapital Premium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CM AM and BerolinaCapital Premium Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CM AM and BerolinaCapital Premium

The main advantage of trading using opposite CM AM and BerolinaCapital Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CM AM position performs unexpectedly, BerolinaCapital Premium 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 BerolinaCapital Premium will offset losses from the drop in BerolinaCapital Premium's long position.
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The idea behind CM AM Monplus NE and BerolinaCapital Premium 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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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.

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