Correlation Between Ring Energy and CTS Eventim

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

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

Diversification Opportunities for Ring Energy and CTS Eventim

-0.41

Correlation Coefficient

Ring Energy  CTS Eventim

Very good diversification

The 3 months correlation between Ring and CTS is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ring Energy and CTS Eventim AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Eventim AG and Ring Energy 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 Ring Energy are associated (or correlated) with CTS Eventim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Eventim AG has no effect on the direction of Ring Energy i.e., Ring Energy and CTS Eventim go up and down completely randomly.

Pair Corralation between Ring Energy and CTS Eventim

Assuming the 90 days trading horizon Ring Energy is expected to under-perform the CTS Eventim. In addition to that, Ring Energy is 1.52 times more volatile than CTS Eventim AG. It trades about -0.01 of its total potential returns per unit of risk. CTS Eventim AG is currently generating about 0.0 per unit of volatility. If you would invest  8,660  in CTS Eventim AG on September 4, 2024 and sell it today you would lose (80.00) from holding CTS Eventim AG or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Ring Energy  vs.  CTS Eventim AG

Ring Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ring Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ring Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CTS Eventim AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTS Eventim AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, CTS Eventim 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 Ring Energy and CTS Eventim

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

The idea behind Ring Energy and CTS Eventim AG 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.