Correlation Between Calian Technologies and Constellation Software

Can any of the company-specific risk be diversified away by investing in both Calian Technologies and Constellation Software 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 Calian Technologies and Constellation Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Calian Technologies and Constellation Software

0.31

Correlation Coefficient

Calian Technologies  Constellation Software

Weak diversification

The 3 months correlation between Calian and Constellation is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Calian Technologies and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software and Calian Technologies 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 Calian Technologies are associated (or correlated) with Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of Calian Technologies i.e., Calian Technologies and Constellation Software go up and down completely randomly.

Pair Corralation between Calian Technologies and Constellation Software

Assuming the 90 days trading horizon Calian Technologies is expected to generate 1.02 times less return on investment than Constellation Software. In addition to that, Calian Technologies is 1.2 times more volatile than Constellation Software. It trades about 0.09 of its total potential returns per unit of risk. Constellation Software is currently generating about 0.11 per unit of volatility. If you would invest  428,516  in Constellation Software on September 13, 2024 and sell it today you would earn a total of  40,194  from holding Constellation Software or generate 9.38% return on investment over 90 days.

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

Calian Technologies  vs.  Constellation Software

Calian Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calian Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Calian Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Constellation Software

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Constellation Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Calian Technologies and Constellation Software

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

The idea behind Calian Technologies and Constellation Software 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.