Correlation Between Ctac NV and DGB Group

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

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

Diversification Opportunities for Ctac NV and DGB Group

-0.36

Correlation Coefficient

Ctac NV  DGB Group

Very good diversification

The 3 months correlation between Ctac and DGB is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ctac NV and DGB Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGB Group NV and Ctac NV 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 Ctac NV are associated (or correlated) with DGB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGB Group NV has no effect on the direction of Ctac NV i.e., Ctac NV and DGB Group go up and down completely randomly.

Pair Corralation between Ctac NV and DGB Group

Assuming the 90 days trading horizon Ctac NV is expected to generate 2.04 times less return on investment than DGB Group. In addition to that, Ctac NV is 1.06 times more volatile than DGB Group NV. It trades about 0.18 of its total potential returns per unit of risk. DGB Group NV is currently generating about 0.4 per unit of volatility. If you would invest  75.00  in DGB Group NV on September 17, 2024 and sell it today you would earn a total of  15.00  from holding DGB Group NV or generate 20.0% return on investment over 90 days.

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

Ctac NV  vs.  DGB Group NV

Ctac NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ctac NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ctac NV is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

DGB Group NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DGB Group NV are ranked lower than 12 (%) 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.

Pair Trading with Ctac NV and DGB Group

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

The idea behind Ctac NV and DGB Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.