Correlation Between Embecta Corp and Centogene

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

By analyzing existing cross correlation between Embecta Corp and Centogene B V, you can compare the effects of market volatilities on Embecta Corp and Centogene 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 Embecta Corp with a short position of Centogene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embecta Corp and Centogene.

Diversification Opportunities for Embecta Corp and Centogene

-0.4

Correlation Coefficient

Embecta Corp  Centogene

Very good diversification

The 3 months correlation between Embecta and Centogene is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Embecta Corp and Centogene B V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centogene B V and Embecta Corp 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 Embecta Corp are associated (or correlated) with Centogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centogene B V has no effect on the direction of Embecta Corp i.e., Embecta Corp and Centogene go up and down completely randomly.

Pair Corralation between Embecta Corp and Centogene

Given the investment horizon of 90 days Embecta Corp is expected to generate 9.51 times less return on investment than Centogene. But when comparing it to its historical volatility, Embecta Corp is 7.99 times less risky than Centogene. It trades about 0.11 of its potential returns per unit of risk. Centogene B V is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Centogene B V on September 12, 2024 and sell it today you would lose (1.00) from holding Centogene B V or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Embecta Corp  vs.  Centogene B V

Embecta Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embecta Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Embecta Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Centogene B V

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centogene B V are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Centogene reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embecta Corp and Centogene

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

The idea behind Embecta Corp and Centogene B V 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.