Correlation Between CTT Systems and Avensia Publ
Can any of the company-specific risk be diversified away by investing in both CTT Systems and Avensia Publ 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 CTT Systems and Avensia Publ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTT Systems AB and Avensia publ AB, you can compare the effects of market volatilities on CTT Systems and Avensia Publ 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 CTT Systems with a short position of Avensia Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTT Systems and Avensia Publ.
Diversification Opportunities for CTT Systems and Avensia Publ
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CTT and Avensia is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CTT Systems AB and Avensia publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avensia publ AB and CTT Systems 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 CTT Systems AB are associated (or correlated) with Avensia Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avensia publ AB has no effect on the direction of CTT Systems i.e., CTT Systems and Avensia Publ go up and down completely randomly.
Pair Corralation between CTT Systems and Avensia Publ
Assuming the 90 days trading horizon CTT Systems AB is expected to under-perform the Avensia Publ. But the stock apears to be less risky and, when comparing its historical volatility, CTT Systems AB is 1.45 times less risky than Avensia Publ. The stock trades about -0.24 of its potential returns per unit of risk. The Avensia publ AB is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 796.00 in Avensia publ AB on October 29, 2024 and sell it today you would earn a total of 90.00 from holding Avensia publ AB or generate 11.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CTT Systems AB vs. Avensia publ AB
Performance |
Timeline |
CTT Systems AB |
Avensia publ AB |
CTT Systems and Avensia Publ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CTT Systems and Avensia Publ
The main advantage of trading using opposite CTT Systems and Avensia Publ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTT Systems position performs unexpectedly, Avensia Publ 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 Avensia Publ will offset losses from the drop in Avensia Publ's long position.CTT Systems vs. Enea AB | CTT Systems vs. BTS Group AB | CTT Systems vs. CellaVision AB | CTT Systems vs. Biotage AB |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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