Correlation Between Comtech Telecommunicatio and CTS

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

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

Diversification Opportunities for Comtech Telecommunicatio and CTS

-0.5

Correlation Coefficient

Comtech Telecommunicatio  CTS

Very good diversification

The 3 months correlation between Comtech and CTS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and Comtech Telecommunicatio 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 Comtech Telecommunications Corp 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 Comtech Telecommunicatio i.e., Comtech Telecommunicatio and CTS go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and CTS

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to generate 4.5 times more return on investment than CTS. However, Comtech Telecommunicatio is 4.5 times more volatile than CTS Corporation. It trades about 0.06 of its potential returns per unit of risk. CTS Corporation is currently generating about 0.02 per unit of risk. If you would invest  257.00  in Comtech Telecommunications Corp on August 30, 2024 and sell it today you would earn a total of  93.00  from holding Comtech Telecommunications Corp or generate 36.19% return on investment over 90 days.

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

Comtech Telecommunications Cor  vs.  CTS Corp.

Comtech Telecommunicatio

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Comtech Telecommunicatio disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 December 2024.

Pair Trading with Comtech Telecommunicatio and CTS

The main advantage of trading using opposite Comtech Telecommunicatio and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comtech Telecommunicatio 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 Comtech Telecommunications Corp 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.