Correlation Between Novotek AB and CTT Systems
Can any of the company-specific risk be diversified away by investing in both Novotek 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 Novotek 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 Novotek AB and CTT Systems AB, you can compare the effects of market volatilities on Novotek 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 Novotek AB with a short position of CTT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and CTT Systems.
Diversification Opportunities for Novotek AB and CTT Systems
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Novotek and CTT is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Novotek 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 Novotek 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 Novotek 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 Novotek AB i.e., Novotek AB and CTT Systems go up and down completely randomly.
Pair Corralation between Novotek AB and CTT Systems
Assuming the 90 days trading horizon Novotek AB is expected to generate 1.14 times more return on investment than CTT Systems. However, Novotek AB is 1.14 times more volatile than CTT Systems AB. It trades about 0.06 of its potential returns per unit of risk. CTT Systems AB is currently generating about 0.04 per unit of risk. If you would invest 4,687 in Novotek AB on August 25, 2024 and sell it today you would earn a total of 2,013 from holding Novotek AB or generate 42.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novotek AB vs. CTT Systems AB
Performance |
| Timeline |
| Novotek AB |
| CTT Systems AB |
Novotek AB and CTT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novotek AB and CTT Systems
The main advantage of trading using opposite Novotek AB and CTT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novotek 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.| Novotek AB vs. Softronic AB | Novotek AB vs. Svedbergs i Dalstorp | Novotek AB vs. Know IT AB | Novotek AB vs. FormPipe Software 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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