Correlation Between DAIDO METAL and CTP NV

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

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

Diversification Opportunities for DAIDO METAL and CTP NV

0.6

Correlation Coefficient

DAIDO METAL  CTP NV

Poor diversification

The 3 months correlation between DAIDO and CTP is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding DAIDO METAL TD and CTP NV EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTP NV EO and DAIDO METAL 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 DAIDO METAL TD 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 EO has no effect on the direction of DAIDO METAL i.e., DAIDO METAL and CTP NV go up and down completely randomly.

Pair Corralation between DAIDO METAL and CTP NV

Assuming the 90 days horizon DAIDO METAL is expected to generate 1.11 times less return on investment than CTP NV. But when comparing it to its historical volatility, DAIDO METAL TD is 1.04 times less risky than CTP NV. It trades about 0.12 of its potential returns per unit of risk. CTP NV EO is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,478  in CTP NV EO on December 20, 2024 and sell it today you would earn a total of  180.00  from holding CTP NV EO or generate 12.18% return on investment over 90 days.

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

DAIDO METAL TD  vs.  CTP NV EO

DAIDO METAL TD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DAIDO METAL TD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DAIDO METAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CTP NV EO

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTP NV EO are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CTP NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAIDO METAL and CTP NV

The main advantage of trading using opposite DAIDO METAL and CTP NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIDO METAL 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 DAIDO METAL TD and CTP NV EO 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.