Correlation Between British American and CTT -
Can any of the company-specific risk be diversified away by investing in both British American and CTT - 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 British American and CTT - into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and CTT Correios, you can compare the effects of market volatilities on British American and CTT - 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 British American with a short position of CTT -. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and CTT -.
Diversification Opportunities for British American and CTT -
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between British and CTT is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and CTT Correios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Correios and British American 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 British American Tobacco are associated (or correlated) with CTT -. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Correios has no effect on the direction of British American i.e., British American and CTT - go up and down completely randomly.
Pair Corralation between British American and CTT -
Assuming the 90 days trading horizon British American is expected to generate 3.09 times less return on investment than CTT -. But when comparing it to its historical volatility, British American Tobacco is 1.5 times less risky than CTT -. It trades about 0.03 of its potential returns per unit of risk. CTT Correios is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 328.00 in CTT Correios on October 16, 2024 and sell it today you would earn a total of 198.00 from holding CTT Correios or generate 60.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. CTT Correios
Performance |
| Timeline |
| British American Tobacco |
| CTT Correios |
British American and CTT - Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and CTT -
The main advantage of trading using opposite British American and CTT - positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, CTT - 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 CTT - will offset losses from the drop in CTT -'s long position.| British American vs. PLAYMATES TOYS | British American vs. BE Semiconductor Industries | British American vs. TOREX SEMICONDUCTOR LTD | British American vs. ScanSource |
| CTT - vs. QBE Insurance Group | CTT - vs. China Reinsurance | CTT - vs. Tower Semiconductor | CTT - vs. Universal Insurance Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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