Correlation Between Capstone Technologies and CACI International

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

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

Diversification Opportunities for Capstone Technologies and CACI International

0.25

Correlation Coefficient

Capstone Technologies  CACI International

Modest diversification

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

Pair Corralation between Capstone Technologies and CACI International

Given the investment horizon of 90 days Capstone Technologies Group is expected to generate 0.13 times more return on investment than CACI International. However, Capstone Technologies Group is 7.84 times less risky than CACI International. It trades about -0.13 of its potential returns per unit of risk. CACI International is currently generating about -0.03 per unit of risk. If you would invest  36.00  in Capstone Technologies Group on December 29, 2024 and sell it today you would lose (1.00) from holding Capstone Technologies Group or give up 2.78% of portfolio value over 90 days.

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

Capstone Technologies Group  vs.  CACI International

Capstone Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capstone Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capstone Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

CACI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CACI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, CACI International is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Capstone Technologies and CACI International

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

The idea behind Capstone Technologies Group and CACI International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.