Correlation Between CellaVision and CTT Systems

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

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

Diversification Opportunities for CellaVision and CTT Systems

0.6

Correlation Coefficient

CellaVision  CTT Systems

Poor diversification

The 3 months correlation between CellaVision and CTT is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CellaVision 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 CellaVision 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 CellaVision 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 CellaVision i.e., CellaVision and CTT Systems go up and down completely randomly.

Pair Corralation between CellaVision and CTT Systems

Assuming the 90 days trading horizon CellaVision AB is expected to under-perform the CTT Systems. In addition to that, CellaVision is 1.06 times more volatile than CTT Systems AB. It trades about -0.1 of its total potential returns per unit of risk. CTT Systems AB is currently generating about -0.06 per unit of volatility. If you would invest  27,900  in CTT Systems AB on August 31, 2024 and sell it today you would lose (2,700) from holding CTT Systems AB or give up 9.68% of portfolio value over 90 days.

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

CellaVision AB  vs.  CTT Systems AB

CellaVision AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CellaVision AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CTT Systems AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTT Systems AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CellaVision and CTT Systems

The main advantage of trading using opposite CellaVision and CTT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CellaVision 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 CellaVision 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.