Correlation Between DGB Group and CTP NV

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

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

Diversification Opportunities for DGB Group and CTP NV

-0.67

Correlation Coefficient

DGB Group  CTP NV

Excellent diversification

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

Pair Corralation between DGB Group and CTP NV

Assuming the 90 days trading horizon DGB Group NV is expected to generate 2.72 times more return on investment than CTP NV. However, DGB Group is 2.72 times more volatile than CTP NV. It trades about 0.13 of its potential returns per unit of risk. CTP NV is currently generating about -0.1 per unit of risk. If you would invest  70.00  in DGB Group NV on September 19, 2024 and sell it today you would earn a total of  18.00  from holding DGB Group NV or generate 25.71% return on investment over 90 days.

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

DGB Group NV  vs.  CTP NV

DGB Group NV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DGB Group NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, DGB Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with DGB Group and CTP NV

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

The idea behind DGB Group NV and CTP NV 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.