Correlation Between Falcon Power and CTCI Corp

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

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

Diversification Opportunities for Falcon Power and CTCI Corp

-0.25

Correlation Coefficient

Falcon Power  CTCI Corp

Very good diversification

The 3 months correlation between Falcon and CTCI is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Power Co and CTCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTCI Corp and Falcon Power 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 Falcon Power Co are associated (or correlated) with CTCI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTCI Corp has no effect on the direction of Falcon Power i.e., Falcon Power and CTCI Corp go up and down completely randomly.

Pair Corralation between Falcon Power and CTCI Corp

Assuming the 90 days trading horizon Falcon Power Co is expected to under-perform the CTCI Corp. In addition to that, Falcon Power is 2.31 times more volatile than CTCI Corp. It trades about -0.1 of its total potential returns per unit of risk. CTCI Corp is currently generating about 0.13 per unit of volatility. If you would invest  3,950  in CTCI Corp on December 27, 2024 and sell it today you would earn a total of  240.00  from holding CTCI Corp or generate 6.08% return on investment over 90 days.

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

Falcon Power Co  vs.  CTCI Corp

Falcon Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Power Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

CTCI Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTCI Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CTCI Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Falcon Power and CTCI Corp

The main advantage of trading using opposite Falcon Power and CTCI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Power position performs unexpectedly, CTCI Corp 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 CTCI Corp will offset losses from the drop in CTCI Corp's long position.

The idea behind Falcon Power Co and CTCI Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.