Correlation Between CAVU Resources and Fuse Science

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

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

Diversification Opportunities for CAVU Resources and Fuse Science

0.4

Correlation Coefficient

CAVU Resources  Fuse Science

Very weak diversification

The 3 months correlation between CAVU and Fuse is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CAVU Resources and Fuse Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuse Science and CAVU Resources 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 CAVU Resources are associated (or correlated) with Fuse Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuse Science has no effect on the direction of CAVU Resources i.e., CAVU Resources and Fuse Science go up and down completely randomly.

Pair Corralation between CAVU Resources and Fuse Science

Given the investment horizon of 90 days CAVU Resources is expected to generate 1.6 times more return on investment than Fuse Science. However, CAVU Resources is 1.6 times more volatile than Fuse Science. It trades about 0.04 of its potential returns per unit of risk. Fuse Science is currently generating about -0.03 per unit of risk. If you would invest  0.05  in CAVU Resources on December 27, 2024 and sell it today you would lose (0.02) from holding CAVU Resources or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

CAVU Resources  vs.  Fuse Science

CAVU Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CAVU Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CAVU Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Fuse Science

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fuse Science has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CAVU Resources and Fuse Science

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

The idea behind CAVU Resources and Fuse Science 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.