Correlation Between Linc AB and CTT Systems
Can any of the company-specific risk be diversified away by investing in both Linc 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 Linc 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 Linc AB and CTT Systems AB, you can compare the effects of market volatilities on Linc 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 Linc AB with a short position of CTT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linc AB and CTT Systems.
Diversification Opportunities for Linc AB and CTT Systems
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Linc and CTT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Linc 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 Linc 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 Linc 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 Linc AB i.e., Linc AB and CTT Systems go up and down completely randomly.
Pair Corralation between Linc AB and CTT Systems
Assuming the 90 days trading horizon Linc AB is expected to generate 1.5 times less return on investment than CTT Systems. In addition to that, Linc AB is 1.03 times more volatile than CTT Systems AB. It trades about 0.03 of its total potential returns per unit of risk. CTT Systems AB is currently generating about 0.05 per unit of volatility. If you would invest 20,360 in CTT Systems AB on September 12, 2024 and sell it today you would earn a total of 7,640 from holding CTT Systems AB or generate 37.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linc AB vs. CTT Systems AB
Performance |
| Timeline |
| Linc AB |
| CTT Systems AB |
Linc AB and CTT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linc AB and CTT Systems
The main advantage of trading using opposite Linc AB and CTT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linc 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.The idea behind Linc AB and CTT Systems AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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