Correlation Between CHIBA BANK and Maschinenfabrik Berthold
Can any of the company-specific risk be diversified away by investing in both CHIBA BANK and Maschinenfabrik Berthold 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 CHIBA BANK and Maschinenfabrik Berthold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHIBA BANK and Maschinenfabrik Berthold Hermle, you can compare the effects of market volatilities on CHIBA BANK and Maschinenfabrik Berthold 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 CHIBA BANK with a short position of Maschinenfabrik Berthold. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIBA BANK and Maschinenfabrik Berthold.
Diversification Opportunities for CHIBA BANK and Maschinenfabrik Berthold
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHIBA and Maschinenfabrik is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA BANK and Maschinenfabrik Berthold Herml in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maschinenfabrik Berthold and CHIBA BANK 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 CHIBA BANK are associated (or correlated) with Maschinenfabrik Berthold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maschinenfabrik Berthold has no effect on the direction of CHIBA BANK i.e., CHIBA BANK and Maschinenfabrik Berthold go up and down completely randomly.
Pair Corralation between CHIBA BANK and Maschinenfabrik Berthold
Assuming the 90 days trading horizon CHIBA BANK is expected to generate 2.03 times more return on investment than Maschinenfabrik Berthold. However, CHIBA BANK is 2.03 times more volatile than Maschinenfabrik Berthold Hermle. It trades about 0.02 of its potential returns per unit of risk. Maschinenfabrik Berthold Hermle is currently generating about -0.14 per unit of risk. If you would invest 800.00 in CHIBA BANK on September 14, 2024 and sell it today you would earn a total of 0.00 from holding CHIBA BANK or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHIBA BANK vs. Maschinenfabrik Berthold Herml
Performance |
| Timeline |
| CHIBA BANK |
| Maschinenfabrik Berthold |
CHIBA BANK and Maschinenfabrik Berthold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHIBA BANK and Maschinenfabrik Berthold
The main advantage of trading using opposite CHIBA BANK and Maschinenfabrik Berthold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIBA BANK position performs unexpectedly, Maschinenfabrik Berthold 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 Maschinenfabrik Berthold will offset losses from the drop in Maschinenfabrik Berthold's long position.The idea behind CHIBA BANK and Maschinenfabrik Berthold Hermle 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.| Maschinenfabrik Berthold vs. BANKINTER ADR 2007 | Maschinenfabrik Berthold vs. Ribbon Communications | Maschinenfabrik Berthold vs. Highlight Communications AG | Maschinenfabrik Berthold vs. CHIBA BANK |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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