Correlation Between CTT Systems and Kentima Holding

Can any of the company-specific risk be diversified away by investing in both CTT Systems and Kentima 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 CTT Systems and Kentima Holding 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 Kentima Holding publ, you can compare the effects of market volatilities on CTT Systems and Kentima 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 CTT Systems with a short position of Kentima Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTT Systems and Kentima Holding.

Diversification Opportunities for CTT Systems and Kentima Holding

-0.03

Correlation Coefficient

CTT Systems  Kentima Holding

Good diversification

The 3 months correlation between CTT and Kentima is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding CTT Systems AB and Kentima Holding publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentima Holding publ 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 Kentima Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentima Holding publ has no effect on the direction of CTT Systems i.e., CTT Systems and Kentima Holding go up and down completely randomly.

Pair Corralation between CTT Systems and Kentima Holding

Assuming the 90 days trading horizon CTT Systems AB is expected to under-perform the Kentima Holding. But the stock apears to be less risky and, when comparing its historical volatility, CTT Systems AB is 1.66 times less risky than Kentima Holding. The stock trades about -0.12 of its potential returns per unit of risk. The Kentima Holding publ is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  216.00  in Kentima Holding publ on December 29, 2024 and sell it today you would lose (8.00) from holding Kentima Holding publ or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

CTT Systems AB  vs.  Kentima Holding publ

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.

Kentima Holding publ

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kentima Holding publ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Kentima Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CTT Systems and Kentima Holding

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

The idea behind CTT Systems AB and Kentima Holding publ 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..