Correlation Between CTS and Neonode
Can any of the company-specific risk be diversified away by investing in both CTS and Neonode 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 Neonode into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTS Corporation and Neonode, you can compare the effects of market volatilities on CTS and Neonode 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 Neonode. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS and Neonode.
Diversification Opportunities for CTS and Neonode
Excellent diversification
The 3 months correlation between CTS and Neonode is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Neonode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neonode 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 Neonode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neonode has no effect on the direction of CTS i.e., CTS and Neonode go up and down completely randomly.
Pair Corralation between CTS and Neonode
Considering the 90-day investment horizon CTS is expected to generate 19.1 times less return on investment than Neonode. But when comparing it to its historical volatility, CTS Corporation is 3.16 times less risky than Neonode. It trades about 0.04 of its potential returns per unit of risk. Neonode is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 590.00 in Neonode on September 14, 2024 and sell it today you would earn a total of 177.00 from holding Neonode or generate 30.0% 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. Neonode
Performance |
| Timeline |
| CTS Corporation |
| Neonode |
CTS and Neonode Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTS and Neonode
The main advantage of trading using opposite CTS and Neonode positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS position performs unexpectedly, Neonode 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 Neonode will offset losses from the drop in Neonode's long position.The idea behind CTS Corporation and Neonode 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.| Neonode vs. LightPath Technologies | Neonode vs. Methode Electronics | Neonode vs. OSI Systems | Neonode vs. Plexus Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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