Correlation Between CES Energy and Calfrac Well

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

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

Diversification Opportunities for CES Energy and Calfrac Well

0.18

Correlation Coefficient

CES Energy  Calfrac Well

Average diversification

The 3 months correlation between CES and Calfrac is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CES Energy Solutions and Calfrac Well Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calfrac Well Services and CES Energy 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 CES Energy Solutions are associated (or correlated) with Calfrac Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calfrac Well Services has no effect on the direction of CES Energy i.e., CES Energy and Calfrac Well go up and down completely randomly.

Pair Corralation between CES Energy and Calfrac Well

Assuming the 90 days trading horizon CES Energy Solutions is expected to under-perform the Calfrac Well. In addition to that, CES Energy is 1.21 times more volatile than Calfrac Well Services. It trades about -0.09 of its total potential returns per unit of risk. Calfrac Well Services is currently generating about 0.16 per unit of volatility. If you would invest  385.00  in Calfrac Well Services on October 20, 2024 and sell it today you would earn a total of  13.00  from holding Calfrac Well Services or generate 3.38% return on investment over 90 days.

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

CES Energy Solutions  vs.  Calfrac Well Services

CES Energy Solutions

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CES Energy Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CES Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Calfrac Well Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Calfrac Well Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Calfrac Well is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CES Energy and Calfrac Well

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

The idea behind CES Energy Solutions and Calfrac Well 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.