Correlation Between Caribbean Utilities and Calian Technologies
Can any of the company-specific risk be diversified away by investing in both Caribbean Utilities and Calian Technologies 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 Caribbean Utilities and Calian Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caribbean Utilities and Calian Technologies, you can compare the effects of market volatilities on Caribbean Utilities and Calian Technologies 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 Caribbean Utilities with a short position of Calian Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribbean Utilities and Calian Technologies.
Diversification Opportunities for Caribbean Utilities and Calian Technologies
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caribbean and Calian is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and Calian Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calian Technologies and Caribbean Utilities 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 Caribbean Utilities are associated (or correlated) with Calian Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calian Technologies has no effect on the direction of Caribbean Utilities i.e., Caribbean Utilities and Calian Technologies go up and down completely randomly.
Pair Corralation between Caribbean Utilities and Calian Technologies
Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 0.8 times more return on investment than Calian Technologies. However, Caribbean Utilities is 1.25 times less risky than Calian Technologies. It trades about 0.09 of its potential returns per unit of risk. Calian Technologies is currently generating about -0.05 per unit of risk. If you would invest 1,134 in Caribbean Utilities on August 27, 2024 and sell it today you would earn a total of 254.00 from holding Caribbean Utilities or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.86% |
| Values | Daily Returns |
Caribbean Utilities vs. Calian Technologies
Performance |
| Timeline |
| Caribbean Utilities |
| Calian Technologies |
Caribbean Utilities and Calian Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caribbean Utilities and Calian Technologies
The main advantage of trading using opposite Caribbean Utilities and Calian Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribbean Utilities position performs unexpectedly, Calian Technologies 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 Calian Technologies will offset losses from the drop in Calian Technologies' long position.| Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Capstone Infrastructure Corp | Caribbean Utilities vs. Richards Packaging Income |
| Calian Technologies vs. Enghouse Systems | Calian Technologies vs. Jamieson Wellness | Calian Technologies vs. TECSYS Inc |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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