Correlation Between CTS and Eshallgo
Can any of the company-specific risk be diversified away by investing in both CTS and Eshallgo 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 Eshallgo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTS Corporation and Eshallgo Class A, you can compare the effects of market volatilities on CTS and Eshallgo 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 Eshallgo. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS and Eshallgo.
Diversification Opportunities for CTS and Eshallgo
Poor diversification
The 3 months correlation between CTS and Eshallgo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Eshallgo Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eshallgo Class A 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 Eshallgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eshallgo Class A has no effect on the direction of CTS i.e., CTS and Eshallgo go up and down completely randomly.
Pair Corralation between CTS and Eshallgo
Considering the 90-day investment horizon CTS Corporation is expected to generate 0.17 times more return on investment than Eshallgo. However, CTS Corporation is 5.99 times less risky than Eshallgo. It trades about -0.4 of its potential returns per unit of risk. Eshallgo Class A is currently generating about -0.1 per unit of risk. If you would invest 5,642 in CTS Corporation on October 14, 2024 and sell it today you would lose (652.00) from holding CTS Corporation or give up 11.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTS Corp. vs. Eshallgo Class A
Performance |
| Timeline |
| CTS Corporation |
| Eshallgo Class A |
CTS and Eshallgo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTS and Eshallgo
The main advantage of trading using opposite CTS and Eshallgo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS position performs unexpectedly, Eshallgo 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 Eshallgo will offset losses from the drop in Eshallgo's long position.The idea behind CTS Corporation and Eshallgo Class A 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.| Eshallgo vs. Plexus Corp | Eshallgo vs. OSI Systems | Eshallgo vs. CTS Corporation | Eshallgo vs. Benchmark Electronics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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