Correlation Between BlackRock and Caspian Services

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

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

Diversification Opportunities for BlackRock and Caspian Services

0.7

Correlation Coefficient

BlackRock  Caspian Services

Poor diversification

The 3 months correlation between BlackRock and Caspian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Caspian Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caspian Services and BlackRock 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 BlackRock are associated (or correlated) with Caspian Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caspian Services has no effect on the direction of BlackRock i.e., BlackRock and Caspian Services go up and down completely randomly.

Pair Corralation between BlackRock and Caspian Services

Considering the 90-day investment horizon BlackRock is expected to generate 25.64 times less return on investment than Caspian Services. But when comparing it to its historical volatility, BlackRock is 36.73 times less risky than Caspian Services. It trades about 0.06 of its potential returns per unit of risk. Caspian Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.11  in Caspian Services on October 4, 2024 and sell it today you would earn a total of  0.29  from holding Caspian Services or generate 263.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

BlackRock  vs.  Caspian Services

BlackRock

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Caspian Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caspian Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caspian Services showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock and Caspian Services

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

The idea behind BlackRock and Caspian Services 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.