Correlation Between CTCI Corp and Carnival Industrial

Can any of the company-specific risk be diversified away by investing in both CTCI Corp and Carnival Industrial 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 CTCI Corp and Carnival Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CTCI Corp and Carnival Industrial

0.61

Correlation Coefficient

CTCI Corp  Carnival Industrial

Poor diversification

The 3 months correlation between CTCI and Carnival is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and Carnival Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Industrial Corp and CTCI Corp 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 CTCI Corp are associated (or correlated) with Carnival Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Industrial Corp has no effect on the direction of CTCI Corp i.e., CTCI Corp and Carnival Industrial go up and down completely randomly.

Pair Corralation between CTCI Corp and Carnival Industrial

Assuming the 90 days trading horizon CTCI Corp is expected to generate 1.43 times more return on investment than Carnival Industrial. However, CTCI Corp is 1.43 times more volatile than Carnival Industrial Corp. It trades about -0.07 of its potential returns per unit of risk. Carnival Industrial Corp is currently generating about -0.1 per unit of risk. If you would invest  4,755  in CTCI Corp on October 9, 2024 and sell it today you would lose (790.00) from holding CTCI Corp or give up 16.61% of portfolio value over 90 days.

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

CTCI Corp  vs.  Carnival Industrial Corp

CTCI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTCI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Carnival Industrial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnival Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Carnival Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CTCI Corp and Carnival Industrial

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

The idea behind CTCI Corp and Carnival Industrial Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.