Correlation Between Rai Way and CTS Eventim

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

By analyzing existing cross correlation between Rai Way SpA and CTS Eventim AG, you can compare the effects of market volatilities on Rai Way and CTS Eventim 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 Rai Way with a short position of CTS Eventim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rai Way and CTS Eventim.

Diversification Opportunities for Rai Way and CTS Eventim

0.77

Correlation Coefficient

Rai Way  CTS Eventim

Poor diversification

The 3 months correlation between Rai and CTS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rai Way SpA and CTS Eventim AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Eventim AG and Rai Way 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 Rai Way SpA are associated (or correlated) with CTS Eventim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Eventim AG has no effect on the direction of Rai Way i.e., Rai Way and CTS Eventim go up and down completely randomly.

Pair Corralation between Rai Way and CTS Eventim

Assuming the 90 days horizon Rai Way is expected to generate 2.03 times less return on investment than CTS Eventim. In addition to that, Rai Way is 1.07 times more volatile than CTS Eventim AG. It trades about 0.1 of its total potential returns per unit of risk. CTS Eventim AG is currently generating about 0.21 per unit of volatility. If you would invest  8,700  in CTS Eventim AG on December 3, 2024 and sell it today you would earn a total of  1,860  from holding CTS Eventim AG or generate 21.38% return on investment over 90 days.

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

Rai Way SpA  vs.  CTS Eventim AG

Rai Way SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rai Way SpA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Rai Way may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CTS Eventim AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Eventim AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CTS Eventim reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rai Way and CTS Eventim

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

The idea behind Rai Way SpA and CTS Eventim AG 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.