Correlation Between CTT Pharmaceutical and Knight Therapeutics
Can any of the company-specific risk be diversified away by investing in both CTT Pharmaceutical and Knight Therapeutics 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 Pharmaceutical and Knight Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTT Pharmaceutical Holdings and Knight Therapeutics, you can compare the effects of market volatilities on CTT Pharmaceutical and Knight Therapeutics 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 Pharmaceutical with a short position of Knight Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTT Pharmaceutical and Knight Therapeutics.
Diversification Opportunities for CTT Pharmaceutical and Knight Therapeutics
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between CTT and Knight is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CTT Pharmaceutical Holdings and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics and CTT Pharmaceutical 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 Pharmaceutical Holdings are associated (or correlated) with Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of CTT Pharmaceutical i.e., CTT Pharmaceutical and Knight Therapeutics go up and down completely randomly.
Pair Corralation between CTT Pharmaceutical and Knight Therapeutics
Given the investment horizon of 90 days CTT Pharmaceutical Holdings is expected to generate 3.01 times more return on investment than Knight Therapeutics. However, CTT Pharmaceutical is 3.01 times more volatile than Knight Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Knight Therapeutics is currently generating about -0.17 per unit of risk. If you would invest 7.00 in CTT Pharmaceutical Holdings on September 1, 2024 and sell it today you would lose (0.01) from holding CTT Pharmaceutical Holdings or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CTT Pharmaceutical Holdings vs. Knight Therapeutics
Performance |
| Timeline |
| CTT Pharmaceutical |
| Knight Therapeutics |
CTT Pharmaceutical and Knight Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTT Pharmaceutical and Knight Therapeutics
The main advantage of trading using opposite CTT Pharmaceutical and Knight Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTT Pharmaceutical position performs unexpectedly, Knight Therapeutics 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 Knight Therapeutics will offset losses from the drop in Knight Therapeutics' long position.| CTT Pharmaceutical vs. Brainsway | CTT Pharmaceutical vs. Venus Concept | CTT Pharmaceutical vs. Tactile Systems Technology | CTT Pharmaceutical vs. Icecure Medical |
| Knight Therapeutics vs. Brainsway | Knight Therapeutics vs. Venus Concept | Knight Therapeutics vs. Tactile Systems Technology | Knight Therapeutics vs. Icecure Medical |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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