Correlation Between CTT Systems and Linc AB
Can any of the company-specific risk be diversified away by investing in both CTT Systems and Linc AB 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 Linc AB 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 Linc AB, you can compare the effects of market volatilities on CTT Systems and Linc AB 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 Linc AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTT Systems and Linc AB.
Diversification Opportunities for CTT Systems and Linc AB
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CTT and Linc is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CTT Systems AB and Linc AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linc 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 Linc AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linc AB has no effect on the direction of CTT Systems i.e., CTT Systems and Linc AB go up and down completely randomly.
Pair Corralation between CTT Systems and Linc AB
Assuming the 90 days trading horizon CTT Systems AB is expected to generate 1.01 times more return on investment than Linc AB. However, CTT Systems is 1.01 times more volatile than Linc AB. It trades about 0.14 of its potential returns per unit of risk. Linc AB is currently generating about -0.01 per unit of risk. If you would invest 26,300 in CTT Systems AB on September 12, 2024 and sell it today you would earn a total of 1,700 from holding CTT Systems AB or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTT Systems AB vs. Linc AB
Performance |
| Timeline |
| CTT Systems AB |
| Linc AB |
CTT Systems and Linc AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTT Systems and Linc AB
The main advantage of trading using opposite CTT Systems and Linc AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTT Systems position performs unexpectedly, Linc AB 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 Linc AB will offset losses from the drop in Linc AB's long position.| CTT Systems vs. AroCell AB | CTT Systems vs. aXichem AB | CTT Systems vs. Gaming Corps AB | CTT Systems vs. Cantargia AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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