Correlation Between CTS and Zepp Health

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

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

Diversification Opportunities for CTS and Zepp Health

0.03

Correlation Coefficient

CTS  Zepp Health

Significant diversification

The 3 months correlation between CTS and Zepp is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Zepp Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zepp Health Corp 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 Zepp Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zepp Health Corp has no effect on the direction of CTS i.e., CTS and Zepp Health go up and down completely randomly.

Pair Corralation between CTS and Zepp Health

Considering the 90-day investment horizon CTS Corporation is expected to under-perform the Zepp Health. But the stock apears to be less risky and, when comparing its historical volatility, CTS Corporation is 1.58 times less risky than Zepp Health. The stock trades about -0.39 of its potential returns per unit of risk. The Zepp Health Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Zepp Health Corp on December 2, 2024 and sell it today you would lose (13.00) from holding Zepp Health Corp or give up 4.64% of portfolio value over 90 days.

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

CTS Corp.  vs.  Zepp Health Corp

CTS Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTS Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Zepp Health Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zepp Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CTS and Zepp Health

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

The idea behind CTS Corporation and Zepp Health Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.