Correlation Between Calfrac Well and Saipem SpA

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

Diversification Opportunities for Calfrac Well and Saipem SpA

-0.43

Correlation Coefficient

Calfrac Well  Saipem SpA

Very good diversification

The 3 months correlation between Calfrac and Saipem is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Calfrac Well Services and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA 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 Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of Calfrac Well i.e., Calfrac Well and Saipem SpA go up and down completely randomly.

Pair Corralation between Calfrac Well and Saipem SpA

Assuming the 90 days horizon Calfrac Well Services is expected to under-perform the Saipem SpA. In addition to that, Calfrac Well is 1.33 times more volatile than Saipem SpA. It trades about -0.03 of its total potential returns per unit of risk. Saipem SpA is currently generating about 0.26 per unit of volatility. If you would invest  213.00  in Saipem SpA on September 22, 2024 and sell it today you would earn a total of  43.00  from holding Saipem SpA or generate 20.19% return on investment over 90 days.

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

Calfrac Well Services  vs.  Saipem SpA

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

Saipem SpA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saipem SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, Saipem SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calfrac Well and Saipem SpA

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

The idea behind Calfrac Well Services and Saipem SpA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.