Correlation Between Cembra Money and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both Cembra Money and Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC, you can compare the effects of market volatilities on Cembra Money and Lendinvest PLC 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 Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and Lendinvest PLC.
Diversification Opportunities for Cembra Money and Lendinvest PLC
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cembra and Lendinvest is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest PLC 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 Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Cembra Money i.e., Cembra Money and Lendinvest PLC go up and down completely randomly.
Pair Corralation between Cembra Money and Lendinvest PLC
Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.65 times more return on investment than Lendinvest PLC. However, Cembra Money Bank is 1.53 times less risky than Lendinvest PLC. It trades about 0.48 of its potential returns per unit of risk. Lendinvest PLC is currently generating about -0.18 per unit of risk. If you would invest 7,890 in Cembra Money Bank on September 13, 2024 and sell it today you would earn a total of 515.00 from holding Cembra Money Bank or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cembra Money Bank vs. Lendinvest PLC
Performance |
| Timeline |
| Cembra Money Bank |
| Lendinvest PLC |
Cembra Money and Lendinvest PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cembra Money and Lendinvest PLC
The main advantage of trading using opposite Cembra Money and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money position performs unexpectedly, Lendinvest PLC 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's long position.| Cembra Money vs. Samsung Electronics Co | Cembra Money vs. Samsung Electronics Co | Cembra Money vs. Hyundai Motor | Cembra Money vs. Reliance Industries Ltd |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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