Correlation Between Schibsted ASA and CTS

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

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

Diversification Opportunities for Schibsted ASA and CTS

0.66

Correlation Coefficient

Schibsted ASA  CTS

Poor diversification

The 3 months correlation between Schibsted and CTS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Schibsted ASA ADR and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and Schibsted ASA 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 Schibsted ASA ADR 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 Schibsted ASA i.e., Schibsted ASA and CTS go up and down completely randomly.

Pair Corralation between Schibsted ASA and CTS

Assuming the 90 days horizon Schibsted ASA is expected to generate 1.58 times less return on investment than CTS. In addition to that, Schibsted ASA is 1.53 times more volatile than CTS Corporation. It trades about 0.06 of its total potential returns per unit of risk. CTS Corporation is currently generating about 0.15 per unit of volatility. If you would invest  4,648  in CTS Corporation on September 15, 2024 and sell it today you would earn a total of  998.00  from holding CTS Corporation or generate 21.47% return on investment over 90 days.

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

Schibsted ASA ADR  vs.  CTS Corp.

Schibsted ASA ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schibsted ASA ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Schibsted ASA showed solid returns over the last few months and may actually be approaching a breakup point.

CTS Corporation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schibsted ASA and CTS

The main advantage of trading using opposite Schibsted ASA and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schibsted ASA 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 Schibsted ASA ADR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.