Correlation Between Addnode Group and CTT Systems

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

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

Diversification Opportunities for Addnode Group and CTT Systems

0.79

Correlation Coefficient

Addnode Group  CTT Systems

Poor diversification

The 3 months correlation between Addnode and CTT is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Addnode Group AB and CTT Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Systems AB and Addnode Group 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 Addnode Group AB are associated (or correlated) with CTT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Systems AB has no effect on the direction of Addnode Group i.e., Addnode Group and CTT Systems go up and down completely randomly.

Pair Corralation between Addnode Group and CTT Systems

Assuming the 90 days trading horizon Addnode Group AB is expected to generate 0.65 times more return on investment than CTT Systems. However, Addnode Group AB is 1.54 times less risky than CTT Systems. It trades about 0.22 of its potential returns per unit of risk. CTT Systems AB is currently generating about 0.05 per unit of risk. If you would invest  8,730  in Addnode Group AB on May 2, 2025 and sell it today you would earn a total of  2,510  from holding Addnode Group AB or generate 28.75% return on investment over 90 days.

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

Addnode Group AB  vs.  CTT Systems AB

Addnode Group AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Addnode Group AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Addnode Group sustained solid returns over the last few months and may actually be approaching a breakup point.

CTT Systems AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CTT Systems AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CTT Systems may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Addnode Group and CTT Systems

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

The idea behind Addnode Group AB and CTT Systems AB 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.