Correlation Between CTS and Data IO
Can any of the company-specific risk be diversified away by investing in both CTS and Data IO 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 Data IO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTS Corporation and Data IO, you can compare the effects of market volatilities on CTS and Data IO 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 Data IO. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS and Data IO.
Diversification Opportunities for CTS and Data IO
Very weak diversification
The 3 months correlation between CTS and Data is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Data IO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data IO 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 Data IO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data IO has no effect on the direction of CTS i.e., CTS and Data IO go up and down completely randomly.
Pair Corralation between CTS and Data IO
Considering the 90-day investment horizon CTS Corporation is expected to generate 0.74 times more return on investment than Data IO. However, CTS Corporation is 1.36 times less risky than Data IO. It trades about 0.06 of its potential returns per unit of risk. Data IO is currently generating about -0.05 per unit of risk. If you would invest 4,445 in CTS Corporation on August 27, 2024 and sell it today you would earn a total of 984.00 from holding CTS Corporation or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTS Corp. vs. Data IO
Performance |
| Timeline |
| CTS Corporation |
| Data IO |
CTS and Data IO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTS and Data IO
The main advantage of trading using opposite CTS and Data IO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS position performs unexpectedly, Data IO 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 Data IO will offset losses from the drop in Data IO's long position.The idea behind CTS Corporation and Data IO 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.| Data IO vs. Maris Tech | Data IO vs. CTS Corporation | Data IO vs. Cps Technologies | Data IO vs. Micropac Industries |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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