Correlation Between Band Protocol and CTXC

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

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

Diversification Opportunities for Band Protocol and CTXC

0.21

Correlation Coefficient

Band Protocol  CTXC

Modest diversification

The 3 months correlation between Band and CTXC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Band Protocol and CTXC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTXC and Band Protocol 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 Band Protocol are associated (or correlated) with CTXC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTXC has no effect on the direction of Band Protocol i.e., Band Protocol and CTXC go up and down completely randomly.

Pair Corralation between Band Protocol and CTXC

Assuming the 90 days trading horizon Band Protocol is expected to generate 3.45 times less return on investment than CTXC. But when comparing it to its historical volatility, Band Protocol is 1.07 times less risky than CTXC. It trades about 0.03 of its potential returns per unit of risk. CTXC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15.00  in CTXC on August 4, 2024 and sell it today you would earn a total of  5.00  from holding CTXC or generate 33.33% return on investment over 90 days.

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

Band Protocol  vs.  CTXC

Band Protocol

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Band Protocol are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Band Protocol may actually be approaching a critical reversion point that can send shares even higher in December 2024.

CTXC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTXC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, CTXC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Band Protocol and CTXC

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

The idea behind Band Protocol and CTXC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.