Correlation Between Softronic and CTT Systems
Can any of the company-specific risk be diversified away by investing in both Softronic 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 Softronic and CTT Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and CTT Systems AB, you can compare the effects of market volatilities on Softronic 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 Softronic with a short position of CTT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and CTT Systems.
Diversification Opportunities for Softronic and CTT Systems
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Softronic and CTT is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Softronic 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 Softronic 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 Softronic 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 Softronic i.e., Softronic and CTT Systems go up and down completely randomly.
Pair Corralation between Softronic and CTT Systems
Assuming the 90 days trading horizon Softronic AB is expected to generate 0.72 times more return on investment than CTT Systems. However, Softronic AB is 1.39 times less risky than CTT Systems. It trades about 0.02 of its potential returns per unit of risk. CTT Systems AB is currently generating about 0.01 per unit of risk. If you would invest 2,165 in Softronic AB on November 8, 2024 and sell it today you would earn a total of 145.00 from holding Softronic AB or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softronic AB vs. CTT Systems AB
Performance |
| Timeline |
| Softronic AB |
| CTT Systems AB |
Softronic and CTT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and CTT Systems
The main advantage of trading using opposite Softronic and CTT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic 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.| Softronic vs. eWork Group AB | Softronic vs. Novotek AB | Softronic vs. Prevas AB | Softronic vs. Proact IT Group |
| CTT Systems vs. Enea AB | CTT Systems vs. BTS Group AB | CTT Systems vs. CellaVision AB | CTT Systems vs. Biotage 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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