Correlation Between SGS SA and CTS

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

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

Diversification Opportunities for SGS SA and CTS

0.06

Correlation Coefficient

SGS SA  CTS

Significant diversification

The 3 months correlation between SGS and CTS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and SGS SA 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 SGS SA 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 SGS SA i.e., SGS SA and CTS go up and down completely randomly.

Pair Corralation between SGS SA and CTS

Assuming the 90 days horizon SGS SA is expected to under-perform the CTS. But the pink sheet apears to be less risky and, when comparing its historical volatility, SGS SA is 1.64 times less risky than CTS. The pink sheet trades about -0.05 of its potential returns per unit of risk. The CTS Corporation is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,213  in CTS Corporation on May 20, 2025 and sell it today you would lose (116.00) from holding CTS Corporation or give up 2.75% of portfolio value over 90 days.

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

SGS SA  vs.  CTS Corp.

SGS SA

Risk-Adjusted Performance

Weakest

Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SGS SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 SGS SA and CTS

The main advantage of trading using opposite SGS SA and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGS SA 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 SGS SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.