Correlation Between Calfrac Well and Bri Chem

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

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

Diversification Opportunities for Calfrac Well and Bri Chem

0.06

Correlation Coefficient

Calfrac Well  Bri Chem

Significant diversification

The 3 months correlation between Calfrac and Bri is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Calfrac Well Services and Bri Chem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bri Chem Corp and Calfrac Well 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 Calfrac Well Services are associated (or correlated) with Bri Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bri Chem Corp has no effect on the direction of Calfrac Well i.e., Calfrac Well and Bri Chem go up and down completely randomly.

Pair Corralation between Calfrac Well and Bri Chem

Assuming the 90 days horizon Calfrac Well Services is expected to under-perform the Bri Chem. But the pink sheet apears to be less risky and, when comparing its historical volatility, Calfrac Well Services is 9.53 times less risky than Bri Chem. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Bri Chem Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Bri Chem Corp on October 7, 2024 and sell it today you would earn a total of  4.00  from holding Bri Chem Corp or generate 19.05% return on investment over 90 days.

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

Calfrac Well Services  vs.  Bri Chem Corp

Calfrac Well Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calfrac Well Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Calfrac Well is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bri Chem Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bri Chem Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Bri Chem reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calfrac Well and Bri Chem

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

The idea behind Calfrac Well Services and Bri Chem 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..