Correlation Between CTP NV and Warehouses

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

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

Diversification Opportunities for CTP NV and Warehouses

0.93

Correlation Coefficient

CTP NV  Warehouses

Almost no diversification

The 3 months correlation between CTP and Warehouses is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw and CTP 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 CTP NV are associated (or correlated) with Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of CTP NV i.e., CTP NV and Warehouses go up and down completely randomly.

Pair Corralation between CTP NV and Warehouses

Assuming the 90 days trading horizon CTP NV is expected to generate 1.52 times less return on investment than Warehouses. But when comparing it to its historical volatility, CTP NV is 1.03 times less risky than Warehouses. It trades about 0.11 of its potential returns per unit of risk. Warehouses de Pauw is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,888  in Warehouses de Pauw on December 30, 2024 and sell it today you would earn a total of  316.00  from holding Warehouses de Pauw or generate 16.74% return on investment over 90 days.

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

CTP NV  vs.  Warehouses de Pauw

CTP NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTP NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CTP NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Warehouses de Pauw

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Warehouses de Pauw are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Warehouses reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTP NV and Warehouses

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

The idea behind CTP NV and Warehouses de Pauw 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.