Correlation Between Kendrion and Ctac NV

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

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

Diversification Opportunities for Kendrion and Ctac NV

-0.45

Correlation Coefficient

Kendrion  Ctac NV

Very good diversification

The 3 months correlation between Kendrion and Ctac is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kendrion NV and Ctac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ctac NV and Kendrion 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 Kendrion NV are associated (or correlated) with Ctac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ctac NV has no effect on the direction of Kendrion i.e., Kendrion and Ctac NV go up and down completely randomly.

Pair Corralation between Kendrion and Ctac NV

Assuming the 90 days trading horizon Kendrion NV is expected to generate 0.76 times more return on investment than Ctac NV. However, Kendrion NV is 1.31 times less risky than Ctac NV. It trades about 0.0 of its potential returns per unit of risk. Ctac NV is currently generating about -0.02 per unit of risk. If you would invest  1,080  in Kendrion NV on November 28, 2024 and sell it today you would lose (10.00) from holding Kendrion NV or give up 0.93% of portfolio value over 90 days.

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

Kendrion NV  vs.  Ctac NV

Kendrion NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kendrion NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kendrion is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ctac NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ctac NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ctac NV is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kendrion and Ctac NV

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

The idea behind Kendrion NV and Ctac NV 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.