Correlation Between Ctek AB and Netel Holding

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

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

Diversification Opportunities for Ctek AB and Netel Holding

0.82

Correlation Coefficient

Ctek AB  Netel Holding

Very poor diversification

The 3 months correlation between Ctek and Netel is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ctek AB and Netel Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netel Holding AB and Ctek AB 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 Ctek AB are associated (or correlated) with Netel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netel Holding AB has no effect on the direction of Ctek AB i.e., Ctek AB and Netel Holding go up and down completely randomly.

Pair Corralation between Ctek AB and Netel Holding

Assuming the 90 days trading horizon Ctek AB is expected to generate 0.65 times more return on investment than Netel Holding. However, Ctek AB is 1.55 times less risky than Netel Holding. It trades about -0.12 of its potential returns per unit of risk. Netel Holding AB is currently generating about -0.24 per unit of risk. If you would invest  1,956  in Ctek AB on August 31, 2024 and sell it today you would lose (338.00) from holding Ctek AB or give up 17.28% of portfolio value over 90 days.

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

Ctek AB  vs.  Netel Holding AB

Ctek AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ctek AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Netel Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Netel Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ctek AB and Netel Holding

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

The idea behind Ctek AB and Netel Holding AB 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.