Correlation Between Cessatech and Strategic Investments

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

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

Diversification Opportunities for Cessatech and Strategic Investments

-0.28

Correlation Coefficient

Cessatech  Strategic Investments

Very good diversification

The 3 months correlation between Cessatech and Strategic is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cessatech AS and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments and Cessatech 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 Cessatech AS are associated (or correlated) with Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Cessatech i.e., Cessatech and Strategic Investments go up and down completely randomly.

Pair Corralation between Cessatech and Strategic Investments

Assuming the 90 days trading horizon Cessatech AS is expected to under-perform the Strategic Investments. In addition to that, Cessatech is 1.05 times more volatile than Strategic Investments AS. It trades about -0.11 of its total potential returns per unit of risk. Strategic Investments AS is currently generating about -0.01 per unit of volatility. If you would invest  108.00  in Strategic Investments AS on October 11, 2024 and sell it today you would lose (6.00) from holding Strategic Investments AS or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.27%
Values	Daily Returns

Cessatech AS  vs.  Strategic Investments AS

Cessatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Strategic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Strategic Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cessatech and Strategic Investments

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

The idea behind Cessatech AS and Strategic Investments AS 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.