Correlation Between CTP NV and Raiffeisen Bank

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

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

Diversification Opportunities for CTP NV and Raiffeisen Bank

-0.37

Correlation Coefficient

CTP NV  Raiffeisen Bank

Very good diversification

The 3 months correlation between CTP and Raiffeisen is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV and Raiffeisen Bank International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raiffeisen Bank Inte 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 Raiffeisen Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raiffeisen Bank Inte has no effect on the direction of CTP NV i.e., CTP NV and Raiffeisen Bank go up and down completely randomly.

Pair Corralation between CTP NV and Raiffeisen Bank

Assuming the 90 days trading horizon CTP NV is expected to under-perform the Raiffeisen Bank. But the stock apears to be less risky and, when comparing its historical volatility, CTP NV is 1.39 times less risky than Raiffeisen Bank. The stock trades about -0.08 of its potential returns per unit of risk. The Raiffeisen Bank International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  44,950  in Raiffeisen Bank International on September 22, 2024 and sell it today you would earn a total of  3,620  from holding Raiffeisen Bank International or generate 8.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

CTP NV  vs.  Raiffeisen Bank International

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Raiffeisen Bank Inte

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Raiffeisen Bank International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Raiffeisen Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CTP NV and Raiffeisen Bank

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

The idea behind CTP NV and Raiffeisen Bank International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.