Correlation Between KABE Group and CTT Systems
Can any of the company-specific risk be diversified away by investing in both KABE Group 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 KABE Group and CTT Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KABE Group AB and CTT Systems AB, you can compare the effects of market volatilities on KABE Group 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 KABE Group with a short position of CTT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and CTT Systems.
Diversification Opportunities for KABE Group and CTT Systems
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KABE and CTT is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group 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 KABE Group 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 KABE Group 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 KABE Group i.e., KABE Group and CTT Systems go up and down completely randomly.
Pair Corralation between KABE Group and CTT Systems
Assuming the 90 days trading horizon KABE Group is expected to generate 1.46 times less return on investment than CTT Systems. But when comparing it to its historical volatility, KABE Group AB is 1.18 times less risky than CTT Systems. It trades about 0.03 of its potential returns per unit of risk. CTT Systems AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 21,541 in CTT Systems AB on August 25, 2024 and sell it today you would earn a total of 3,659 from holding CTT Systems AB or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. CTT Systems AB
Performance |
| Timeline |
| KABE Group AB |
| CTT Systems AB |
KABE Group and CTT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and CTT Systems
The main advantage of trading using opposite KABE Group and CTT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group 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.| KABE Group vs. Byggmax Group AB | KABE Group vs. Svedbergs i Dalstorp | KABE Group vs. Inwido AB | KABE Group vs. New Wave Group |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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