Correlation Between Skillful Craftsman and CTS

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

By analyzing existing cross correlation between Skillful Craftsman Education and CTS Corporation, you can compare the effects of market volatilities on Skillful Craftsman and CTS 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 Skillful Craftsman with a short position of CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skillful Craftsman and CTS.

Diversification Opportunities for Skillful Craftsman and CTS

-0.34

Correlation Coefficient

Skillful Craftsman  CTS

Very good diversification

The 3 months correlation between Skillful and CTS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Skillful Craftsman Education and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and Skillful Craftsman 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 Skillful Craftsman Education are associated (or correlated) with CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of Skillful Craftsman i.e., Skillful Craftsman and CTS go up and down completely randomly.

Pair Corralation between Skillful Craftsman and CTS

Given the investment horizon of 90 days Skillful Craftsman is expected to generate 5.34 times less return on investment than CTS. In addition to that, Skillful Craftsman is 2.04 times more volatile than CTS Corporation. It trades about 0.0 of its total potential returns per unit of risk. CTS Corporation is currently generating about 0.04 per unit of volatility. If you would invest  4,059  in CTS Corporation on September 26, 2024 and sell it today you would earn a total of  1,283  from holding CTS Corporation or generate 31.61% return on investment over 90 days.

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

Skillful Craftsman Education  vs.  CTS Corp.

Skillful Craftsman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skillful Craftsman Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Skillful Craftsman is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

CTS Corporation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 6 (%) 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 January 2025.

Pair Trading with Skillful Craftsman and CTS

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

The idea behind Skillful Craftsman Education and CTS Corporation 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.