Correlation Between Lantronix and CTS

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

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

Diversification Opportunities for Lantronix and CTS

0.12

Correlation Coefficient

Lantronix  CTS

Average diversification

The 3 months correlation between Lantronix and CTS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lantronix and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and Lantronix 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 Lantronix 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 Lantronix i.e., Lantronix and CTS go up and down completely randomly.

Pair Corralation between Lantronix and CTS

Given the investment horizon of 90 days Lantronix is expected to generate 2.85 times more return on investment than CTS. However, Lantronix is 2.85 times more volatile than CTS Corporation. It trades about 0.17 of its potential returns per unit of risk. CTS Corporation is currently generating about -0.05 per unit of risk. If you would invest  287.00  in Lantronix on June 29, 2025 and sell it today you would earn a total of  169.00  from holding Lantronix or generate 58.89% return on investment over 90 days.

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

Lantronix  vs.  CTS Corp.

Lantronix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lantronix are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Lantronix showed solid returns over the last few months and may actually be approaching a breakup point.

CTS Corporation

Risk-Adjusted Performance

Weakest

Over the last 90 days CTS Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CTS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lantronix and CTS

The main advantage of trading using opposite Lantronix and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lantronix 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 Lantronix 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 Global Correlations module to find global opportunities by holding instruments from different markets.