Correlation Between Calian Technologies and Faction Investment

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

By analyzing existing cross correlation between Calian Technologies and Faction Investment Group, you can compare the effects of market volatilities on Calian Technologies and Faction Investment 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 Faction Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calian Technologies and Faction Investment.

Diversification Opportunities for Calian Technologies and Faction Investment

0.07

Correlation Coefficient

Calian Technologies  Faction Investment

Significant diversification

The 3 months correlation between Calian and Faction is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Calian Technologies and Faction Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faction Investment 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 Faction Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faction Investment has no effect on the direction of Calian Technologies i.e., Calian Technologies and Faction Investment go up and down completely randomly.

Pair Corralation between Calian Technologies and Faction Investment

Assuming the 90 days trading horizon Calian Technologies is expected to under-perform the Faction Investment. But the stock apears to be less risky and, when comparing its historical volatility, Calian Technologies is 7.02 times less risky than Faction Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Faction Investment Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Faction Investment Group on October 10, 2024 and sell it today you would lose (5.00) from holding Faction Investment Group or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Calian Technologies  vs.  Faction Investment Group

Calian Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calian Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Calian Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Faction Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Faction Investment Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Faction Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calian Technologies and Faction Investment

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

The idea behind Calian Technologies and Faction Investment Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.