Correlation Between CTT Pharmaceutical and Rimrock Gold

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

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

Diversification Opportunities for CTT Pharmaceutical and Rimrock Gold

-0.02

Correlation Coefficient

CTT Pharmaceutical  Rimrock Gold

Good diversification

The 3 months correlation between CTT and Rimrock is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CTT Pharmaceutical Holdings and Rimrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimrock Gold Corp and CTT Pharmaceutical 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 Pharmaceutical Holdings are associated (or correlated) with Rimrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimrock Gold Corp has no effect on the direction of CTT Pharmaceutical i.e., CTT Pharmaceutical and Rimrock Gold go up and down completely randomly.

Pair Corralation between CTT Pharmaceutical and Rimrock Gold

Given the investment horizon of 90 days CTT Pharmaceutical Holdings is expected to generate 0.68 times more return on investment than Rimrock Gold. However, CTT Pharmaceutical Holdings is 1.47 times less risky than Rimrock Gold. It trades about 0.15 of its potential returns per unit of risk. Rimrock Gold Corp is currently generating about 0.06 per unit of risk. If you would invest  4.75  in CTT Pharmaceutical Holdings on October 6, 2024 and sell it today you would earn a total of  1.16  from holding CTT Pharmaceutical Holdings or generate 24.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

CTT Pharmaceutical Holdings  vs.  Rimrock Gold Corp

CTT Pharmaceutical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CTT Pharmaceutical Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CTT Pharmaceutical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Rimrock Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rimrock Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rimrock Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTT Pharmaceutical and Rimrock Gold

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

The idea behind CTT Pharmaceutical Holdings and Rimrock Gold Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.