Correlation Between CTP NV and Komercni Banka

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

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

Diversification Opportunities for CTP NV and Komercni Banka

-0.67

Correlation Coefficient

CTP NV  Komercni Banka

Excellent diversification

The 3 months correlation between CTP and Komercni is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV and Komercni Banka AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komercni Banka AS 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 Komercni Banka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komercni Banka AS has no effect on the direction of CTP NV i.e., CTP NV and Komercni Banka go up and down completely randomly.

Pair Corralation between CTP NV and Komercni Banka

Assuming the 90 days trading horizon CTP NV is expected to under-perform the Komercni Banka. In addition to that, CTP NV is 1.98 times more volatile than Komercni Banka AS. It trades about -0.06 of its total potential returns per unit of risk. Komercni Banka AS is currently generating about 0.18 per unit of volatility. If you would invest  77,400  in Komercni Banka AS on September 20, 2024 and sell it today you would earn a total of  6,800  from holding Komercni Banka AS or generate 8.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CTP NV  vs.  Komercni Banka AS

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. Even with relatively invariable basic indicators, CTP NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Komercni Banka AS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Komercni Banka AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Komercni Banka may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CTP NV and Komercni Banka

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

The idea behind CTP NV and Komercni Banka AS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.