Correlation Between CTT Systems and Biotage AB

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

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

Diversification Opportunities for CTT Systems and Biotage AB

0.84

Correlation Coefficient

CTT Systems  Biotage AB

Very poor diversification

The 3 months correlation between CTT and Biotage is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CTT Systems AB and Biotage AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotage AB and CTT Systems 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 CTT Systems AB are associated (or correlated) with Biotage AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotage AB has no effect on the direction of CTT Systems i.e., CTT Systems and Biotage AB go up and down completely randomly.

Pair Corralation between CTT Systems and Biotage AB

Assuming the 90 days trading horizon CTT Systems AB is expected to generate 0.83 times more return on investment than Biotage AB. However, CTT Systems AB is 1.2 times less risky than Biotage AB. It trades about -0.12 of its potential returns per unit of risk. Biotage AB is currently generating about -0.19 per unit of risk. If you would invest  28,100  in CTT Systems AB on December 29, 2024 and sell it today you would lose (6,700) from holding CTT Systems AB or give up 23.84% of portfolio value over 90 days.

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

CTT Systems AB  vs.  Biotage AB

CTT Systems AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTT Systems 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Biotage AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biotage 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CTT Systems and Biotage AB

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

The idea behind CTT Systems AB and Biotage 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.