Correlation Between CTS and AviChina Industry
Can any of the company-specific risk be diversified away by investing in both CTS and AviChina Industry 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 CTS and AviChina Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTS Corporation and AviChina Industry Technology, you can compare the effects of market volatilities on CTS and AviChina Industry 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 CTS with a short position of AviChina Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS and AviChina Industry.
Diversification Opportunities for CTS and AviChina Industry
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTS and AviChina is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and AviChina Industry Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AviChina Industry and CTS 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 CTS Corporation are associated (or correlated) with AviChina Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AviChina Industry has no effect on the direction of CTS i.e., CTS and AviChina Industry go up and down completely randomly.
Pair Corralation between CTS and AviChina Industry
Considering the 90-day investment horizon CTS Corporation is expected to generate 0.82 times more return on investment than AviChina Industry. However, CTS Corporation is 1.22 times less risky than AviChina Industry. It trades about 0.05 of its potential returns per unit of risk. AviChina Industry Technology is currently generating about 0.03 per unit of risk. If you would invest 3,922 in CTS Corporation on September 14, 2024 and sell it today you would earn a total of 1,709 from holding CTS Corporation or generate 43.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTS Corp. vs. AviChina Industry Technology
Performance |
| Timeline |
| CTS Corporation |
| AviChina Industry |
CTS and AviChina Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTS and AviChina Industry
The main advantage of trading using opposite CTS and AviChina Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS position performs unexpectedly, AviChina Industry 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 AviChina Industry will offset losses from the drop in AviChina Industry's long position.The idea behind CTS Corporation and AviChina Industry Technology 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.| AviChina Industry vs. CTS Corporation | AviChina Industry vs. NETGEAR | AviChina Industry vs. Coda Octopus Group | AviChina Industry vs. Radcom |
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.
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