Correlation Between Caledonia Investments and Futura Medical

Can any of the company-specific risk be diversified away by investing in both Caledonia Investments and Futura Medical 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 Caledonia Investments and Futura Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Caledonia Investments and Futura Medical

-0.88

Correlation Coefficient

Caledonia Investments  Futura Medical

Pay attention - limited upside

The 3 months correlation between Caledonia and Futura is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical and Caledonia Investments 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 Caledonia Investments are associated (or correlated) with Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Caledonia Investments i.e., Caledonia Investments and Futura Medical go up and down completely randomly.

Pair Corralation between Caledonia Investments and Futura Medical

Assuming the 90 days trading horizon Caledonia Investments is expected to generate 0.16 times more return on investment than Futura Medical. However, Caledonia Investments is 6.08 times less risky than Futura Medical. It trades about 0.06 of its potential returns per unit of risk. Futura Medical is currently generating about -0.23 per unit of risk. If you would invest  353,000  in Caledonia Investments on December 24, 2024 and sell it today you would earn a total of  14,000  from holding Caledonia Investments or generate 3.97% return on investment over 90 days.

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

Caledonia Investments  vs.  Futura Medical

Caledonia Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caledonia Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Caledonia Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Futura Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Caledonia Investments and Futura Medical

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

The idea behind Caledonia Investments and Futura Medical 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.