Correlation Between CTP NV and GANGLONG CHINA

Can any of the company-specific risk be diversified away by investing in both CTP NV and GANGLONG CHINA 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 CTP NV and GANGLONG CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CTP NV EO and GANGLONG CHINA PRGRLTD, you can compare the effects of market volatilities on CTP NV and GANGLONG CHINA 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 CTP NV with a short position of GANGLONG CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTP NV and GANGLONG CHINA.

Diversification Opportunities for CTP NV and GANGLONG CHINA

0.31

Correlation Coefficient

CTP NV  GANGLONG CHINA

Weak diversification

The 3 months correlation between CTP and GANGLONG is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV EO and GANGLONG CHINA PRGRLTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GANGLONG CHINA PRGRLTD and CTP NV 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 CTP NV EO are associated (or correlated) with GANGLONG CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GANGLONG CHINA PRGRLTD has no effect on the direction of CTP NV i.e., CTP NV and GANGLONG CHINA go up and down completely randomly.

Pair Corralation between CTP NV and GANGLONG CHINA

Assuming the 90 days horizon CTP NV EO is expected to under-perform the GANGLONG CHINA. But the stock apears to be less risky and, when comparing its historical volatility, CTP NV EO is 27.0 times less risky than GANGLONG CHINA. The stock trades about -0.1 of its potential returns per unit of risk. The GANGLONG CHINA PRGRLTD is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.80  in GANGLONG CHINA PRGRLTD on September 23, 2024 and sell it today you would earn a total of  0.10  from holding GANGLONG CHINA PRGRLTD or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CTP NV EO  vs.  GANGLONG CHINA PRGRLTD

CTP NV EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTP NV EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GANGLONG CHINA PRGRLTD

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GANGLONG CHINA PRGRLTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GANGLONG CHINA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTP NV and GANGLONG CHINA

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

The idea behind CTP NV EO and GANGLONG CHINA PRGRLTD 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.