Correlation Between BV Delftsch and Ctac NV

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

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

Diversification Opportunities for BV Delftsch and Ctac NV

-0.05

Correlation Coefficient

BV Delftsch  Ctac NV

Good diversification

The 3 months correlation between PORF and Ctac is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BV Delftsch Aardewerkfabriek and Ctac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ctac NV and BV Delftsch 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 BV Delftsch Aardewerkfabriek 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 BV Delftsch i.e., BV Delftsch and Ctac NV go up and down completely randomly.

Pair Corralation between BV Delftsch and Ctac NV

Assuming the 90 days trading horizon BV Delftsch is expected to generate 9.85 times less return on investment than Ctac NV. In addition to that, BV Delftsch is 1.17 times more volatile than Ctac NV. It trades about 0.01 of its total potential returns per unit of risk. Ctac NV is currently generating about 0.12 per unit of volatility. If you would invest  285.00  in Ctac NV on December 19, 2024 and sell it today you would earn a total of  66.00  from holding Ctac NV or generate 23.16% return on investment over 90 days.

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

BV Delftsch Aardewerkfabriek  vs.  Ctac NV

BV Delftsch Aardewer

Risk-Adjusted Performance

Very Weak

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

Ctac NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ctac NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ctac NV unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BV Delftsch and Ctac NV

The main advantage of trading using opposite BV Delftsch and Ctac NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BV Delftsch 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 BV Delftsch Aardewerkfabriek 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.