Correlation Between Cemtrex Pref and Baron Fintech

Can any of the company-specific risk be diversified away by investing in both Cemtrex Pref and Baron Fintech 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 Cemtrex Pref and Baron Fintech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cemtrex Pref and Baron Fintech, you can compare the effects of market volatilities on Cemtrex Pref and Baron Fintech 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 Cemtrex Pref with a short position of Baron Fintech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cemtrex Pref and Baron Fintech.

Diversification Opportunities for Cemtrex Pref and Baron Fintech

0.86

Correlation Coefficient

Cemtrex Pref  Baron Fintech

Very poor diversification

The 3 months correlation between Cemtrex and Baron is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cemtrex Pref and Baron Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Fintech and Cemtrex Pref 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 Cemtrex Pref are associated (or correlated) with Baron Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Fintech has no effect on the direction of Cemtrex Pref i.e., Cemtrex Pref and Baron Fintech go up and down completely randomly.

Pair Corralation between Cemtrex Pref and Baron Fintech

Assuming the 90 days horizon Cemtrex Pref is expected to generate 11.83 times more return on investment than Baron Fintech. However, Cemtrex Pref is 11.83 times more volatile than Baron Fintech. It trades about 0.11 of its potential returns per unit of risk. Baron Fintech is currently generating about 0.1 per unit of risk. If you would invest  36.00  in Cemtrex Pref on September 28, 2024 and sell it today you would earn a total of  49.00  from holding Cemtrex Pref or generate 136.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	27.42%
Values	Daily Returns

Cemtrex Pref  vs.  Baron Fintech

Cemtrex Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemtrex Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cemtrex Pref is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Baron Fintech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Fintech are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Fintech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cemtrex Pref and Baron Fintech

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

The idea behind Cemtrex Pref and Baron Fintech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.