Correlation Between CTP NV and Warehouses

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

By analyzing existing cross correlation between CTP NV and Warehouses de Pauw, you can compare the effects of market volatilities on CTP NV and Warehouses 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 Warehouses. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTP NV and Warehouses.

Diversification Opportunities for CTP NV and Warehouses

0.83

Correlation Coefficient

CTP NV  Warehouses

Very poor diversification

The 3 months correlation between CTP and Warehouses is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw 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 are associated (or correlated) with Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of CTP NV i.e., CTP NV and Warehouses go up and down completely randomly.

Pair Corralation between CTP NV and Warehouses

Assuming the 90 days trading horizon CTP NV is expected to generate 0.83 times more return on investment than Warehouses. However, CTP NV is 1.21 times less risky than Warehouses. It trades about -0.1 of its potential returns per unit of risk. Warehouses de Pauw is currently generating about -0.25 per unit of risk. If you would invest  1,646  in CTP NV on September 19, 2024 and sell it today you would lose (134.00) from holding CTP NV or give up 8.14% of portfolio value over 90 days.

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

CTP NV  vs.  Warehouses de Pauw

CTP NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Warehouses de Pauw

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warehouses de Pauw has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CTP NV and Warehouses

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

The idea behind CTP NV and Warehouses de Pauw 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.