Correlation Between Cembra Money and TRAVEL +

Can any of the company-specific risk be diversified away by investing in both Cembra Money and TRAVEL + 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 TRAVEL + 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 TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on Cembra Money and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and TRAVEL +.

Diversification Opportunities for Cembra Money and TRAVEL +

0.72

Correlation Coefficient

Cembra Money  TRAVEL +

Poor diversification

The 3 months correlation between Cembra and TRAVEL is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of Cembra Money i.e., Cembra Money and TRAVEL + go up and down completely randomly.

Pair Corralation between Cembra Money and TRAVEL +

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 2.01 times more return on investment than TRAVEL +. However, Cembra Money is 2.01 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.17 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.26 per unit of risk. If you would invest  7,970  in Cembra Money Bank on April 24, 2025 and sell it today you would earn a total of  3,100  from holding Cembra Money Bank or generate 38.9% return on investment over 90 days.

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

Cembra Money Bank  vs.  TRAVEL LEISURE DL 01

Cembra Money Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cembra Money unveiled solid returns over the last few months and may actually be approaching a breakup point.

TRAVEL LEISURE DL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cembra Money and TRAVEL +

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

The idea behind Cembra Money Bank and TRAVEL LEISURE DL 01 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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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.