Correlation Between United States and CTS Eventim

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

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

Diversification Opportunities for United States and CTS Eventim

0.04

Correlation Coefficient

United States  CTS Eventim

Significant diversification

The 3 months correlation between United and CTS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and CTS Eventim go up and down completely randomly.

Pair Corralation between United States and CTS Eventim

Assuming the 90 days trading horizon United States Steel is expected to generate 1.41 times more return on investment than CTS Eventim. However, United States is 1.41 times more volatile than CTS Eventim AG. It trades about -0.02 of its potential returns per unit of risk. CTS Eventim AG is currently generating about -0.08 per unit of risk. If you would invest  3,183  in United States Steel on October 9, 2024 and sell it today you would lose (203.00) from holding United States Steel or give up 6.38% of portfolio value over 90 days.

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

United States Steel  vs.  CTS Eventim AG

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The current 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 latest fragile performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with United States and CTS Eventim

The main advantage of trading using opposite United States and CTS Eventim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.