Correlation Between Studsvik and CTT Systems
Can any of the company-specific risk be diversified away by investing in both Studsvik 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 Studsvik and CTT Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Studsvik AB and CTT Systems AB, you can compare the effects of market volatilities on Studsvik 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 Studsvik with a short position of CTT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Studsvik and CTT Systems.
Diversification Opportunities for Studsvik and CTT Systems
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Studsvik and CTT is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Studsvik 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 Studsvik 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 Studsvik 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 Studsvik i.e., Studsvik and CTT Systems go up and down completely randomly.
Pair Corralation between Studsvik and CTT Systems
Assuming the 90 days trading horizon Studsvik is expected to generate 92.67 times less return on investment than CTT Systems. In addition to that, Studsvik is 1.06 times more volatile than CTT Systems AB. It trades about 0.0 of its total potential returns per unit of risk. CTT Systems AB is currently generating about 0.03 per unit of volatility. If you would invest 23,352 in CTT Systems AB on October 11, 2024 and sell it today you would earn a total of 4,048 from holding CTT Systems AB or generate 17.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Studsvik AB vs. CTT Systems AB
Performance |
| Timeline |
| Studsvik AB |
| CTT Systems AB |
Studsvik and CTT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Studsvik and CTT Systems
The main advantage of trading using opposite Studsvik and CTT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Studsvik 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 Studsvik 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. 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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