Correlation Between CTS and Fenbo Holdings

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

By analyzing existing cross correlation between CTS Corporation and Fenbo Holdings Limited, you can compare the effects of market volatilities on CTS and Fenbo Holdings 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 Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS and Fenbo Holdings.

Diversification Opportunities for CTS and Fenbo Holdings

-0.65

Correlation Coefficient

CTS  Fenbo Holdings

Excellent diversification

The 3 months correlation between CTS and Fenbo is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings 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 Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of CTS i.e., CTS and Fenbo Holdings go up and down completely randomly.

Pair Corralation between CTS and Fenbo Holdings

Considering the 90-day investment horizon CTS Corporation is expected to under-perform the Fenbo Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CTS Corporation is 7.66 times less risky than Fenbo Holdings. The stock trades about -0.28 of its potential returns per unit of risk. The Fenbo Holdings Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  149.00  in Fenbo Holdings Limited on October 11, 2024 and sell it today you would earn a total of  26.00  from holding Fenbo Holdings Limited or generate 17.45% return on investment over 90 days.

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

CTS Corp.  vs.  Fenbo Holdings Limited

CTS Corporation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CTS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fenbo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fenbo Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CTS and Fenbo Holdings

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

The idea behind CTS Corporation and Fenbo Holdings Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.