Correlation Between Garo AB and CTT Systems
Can any of the company-specific risk be diversified away by investing in both Garo AB and CTT Systems 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 Garo AB and CTT Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garo AB and CTT Systems AB, you can compare the effects of market volatilities on Garo AB and CTT Systems 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 Garo AB with a short position of CTT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garo AB and CTT Systems.
Diversification Opportunities for Garo AB and CTT Systems
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Garo and CTT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Garo AB and CTT Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Systems AB and Garo AB 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 Garo AB are associated (or correlated) with CTT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Systems AB has no effect on the direction of Garo AB i.e., Garo AB and CTT Systems go up and down completely randomly.
Pair Corralation between Garo AB and CTT Systems
Assuming the 90 days trading horizon Garo AB is expected to under-perform the CTT Systems. In addition to that, Garo AB is 1.34 times more volatile than CTT Systems AB. It trades about -0.11 of its total potential returns per unit of risk. CTT Systems AB is currently generating about 0.02 per unit of volatility. If you would invest 21,567 in CTT Systems AB on August 28, 2024 and sell it today you would earn a total of 3,233 from holding CTT Systems AB or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garo AB vs. CTT Systems AB
Performance |
| Timeline |
| Garo AB |
| CTT Systems AB |
Garo AB and CTT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garo AB and CTT Systems
The main advantage of trading using opposite Garo AB and CTT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garo AB position performs unexpectedly, CTT Systems 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 Systems will offset losses from the drop in CTT Systems' long position.| Garo AB vs. Addtech AB | Garo AB vs. Teqnion AB | Garo AB vs. Vitec Software Group | Garo AB vs. Lagercrantz Group AB |
| CTT Systems vs. aXichem AB | CTT Systems vs. Gaming Corps AB | CTT Systems vs. Cantargia AB | CTT Systems vs. KABE Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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