Correlation Between CTT Systems and Bong AB

Can any of the company-specific risk be diversified away by investing in both CTT Systems and Bong AB 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 CTT Systems and Bong AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CTT Systems AB and Bong AB, you can compare the effects of market volatilities on CTT Systems and Bong AB 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 CTT Systems with a short position of Bong AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTT Systems and Bong AB.

Diversification Opportunities for CTT Systems and Bong AB

-0.23

Correlation Coefficient

CTT Systems  Bong AB

Very good diversification

The 3 months correlation between CTT and Bong is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding CTT Systems AB and Bong AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bong AB and CTT Systems 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 CTT Systems AB are associated (or correlated) with Bong AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bong AB has no effect on the direction of CTT Systems i.e., CTT Systems and Bong AB go up and down completely randomly.

Pair Corralation between CTT Systems and Bong AB

Assuming the 90 days trading horizon CTT Systems AB is expected to generate 1.0 times more return on investment than Bong AB. However, CTT Systems is 1.0 times more volatile than Bong AB. It trades about 0.11 of its potential returns per unit of risk. Bong AB is currently generating about 0.02 per unit of risk. If you would invest  32,360  in CTT Systems AB on February 28, 2024 and sell it today you would earn a total of  3,040  from holding CTT Systems AB or generate 9.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CTT Systems AB  vs.  Bong AB

CTT Systems AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CTT Systems AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, CTT Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bong AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bong AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bong AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CTT Systems and Bong AB

The main advantage of trading using opposite CTT Systems and Bong AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTT Systems position performs unexpectedly, Bong AB 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 Bong AB will offset losses from the drop in Bong AB's long position.

The idea behind CTT Systems AB and Bong 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.