Correlation Between Calfrac Well and Greenway Technologies

Can any of the company-specific risk be diversified away by investing in both Calfrac Well and Greenway Technologies 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 Greenway Technologies 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 Greenway Technologies, you can compare the effects of market volatilities on Calfrac Well and Greenway Technologies 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 Greenway Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calfrac Well and Greenway Technologies.

Diversification Opportunities for Calfrac Well and Greenway Technologies

0.03

Correlation Coefficient

Calfrac Well  Greenway Technologies

Significant diversification

The 3 months correlation between Calfrac and Greenway is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Calfrac Well Services and Greenway Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenway Technologies 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 Greenway Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenway Technologies has no effect on the direction of Calfrac Well i.e., Calfrac Well and Greenway Technologies go up and down completely randomly.

Pair Corralation between Calfrac Well and Greenway Technologies

Assuming the 90 days horizon Calfrac Well Services is expected to under-perform the Greenway Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Calfrac Well Services is 7.85 times less risky than Greenway Technologies. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Greenway Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3.10  in Greenway Technologies on November 29, 2024 and sell it today you would earn a total of  1.40  from holding Greenway Technologies or generate 45.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Calfrac Well Services  vs.  Greenway Technologies

Calfrac Well Services

Risk-Adjusted Performance

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Greenway Technologies

Risk-Adjusted Performance

OK

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

Pair Trading with Calfrac Well and Greenway Technologies

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

The idea behind Calfrac Well Services and Greenway Technologies 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.