Correlation Between CTP NV and Atrium Ljungberg

Can any of the company-specific risk be diversified away by investing in both CTP NV and Atrium Ljungberg 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 Atrium Ljungberg 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 Atrium Ljungberg AB, you can compare the effects of market volatilities on CTP NV and Atrium Ljungberg 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 Atrium Ljungberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTP NV and Atrium Ljungberg.

Diversification Opportunities for CTP NV and Atrium Ljungberg

0.78

Correlation Coefficient

CTP NV  Atrium Ljungberg

Poor diversification

The 3 months correlation between CTP and Atrium is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV EO and Atrium Ljungberg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Ljungberg 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 Atrium Ljungberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Ljungberg has no effect on the direction of CTP NV i.e., CTP NV and Atrium Ljungberg go up and down completely randomly.

Pair Corralation between CTP NV and Atrium Ljungberg

Assuming the 90 days horizon CTP NV EO is expected to under-perform the Atrium Ljungberg. But the stock apears to be less risky and, when comparing its historical volatility, CTP NV EO is 1.7 times less risky than Atrium Ljungberg. The stock trades about -0.03 of its potential returns per unit of risk. The Atrium Ljungberg AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,654  in Atrium Ljungberg AB on September 23, 2024 and sell it today you would earn a total of  50.00  from holding Atrium Ljungberg AB or generate 3.02% return on investment over 90 days.

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

CTP NV EO  vs.  Atrium Ljungberg AB

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.

Atrium Ljungberg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Ljungberg AB 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.

Pair Trading with CTP NV and Atrium Ljungberg

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

The idea behind CTP NV EO and Atrium Ljungberg 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.