Correlation Between Universal Electronics and CTS

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

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

Diversification Opportunities for Universal Electronics and CTS

-0.08

Correlation Coefficient

Universal Electronics  CTS

Good diversification

The 3 months correlation between Universal and CTS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and Universal Electronics 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 Universal Electronics 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 Universal Electronics i.e., Universal Electronics and CTS go up and down completely randomly.

Pair Corralation between Universal Electronics and CTS

Given the investment horizon of 90 days Universal Electronics is expected to under-perform the CTS. In addition to that, Universal Electronics is 1.82 times more volatile than CTS Corporation. It trades about -0.01 of its total potential returns per unit of risk. CTS Corporation is currently generating about 0.02 per unit of volatility. If you would invest  3,558  in CTS Corporation on July 19, 2025 and sell it today you would earn a total of  543.00  from holding CTS Corporation or generate 15.26% return on investment over 90 days.

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

Universal Electronics  vs.  CTS Corp.

Universal Electronics

Risk-Adjusted Performance

Weakest

Over the last 90 days Universal Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in November 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CTS Corporation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Universal Electronics and CTS

The main advantage of trading using opposite Universal Electronics and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Electronics 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 Universal Electronics 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.