Correlation Between CNJ Capital and Falcon Energy

Can any of the company-specific risk be diversified away by investing in both CNJ Capital and Falcon Energy 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 CNJ Capital and Falcon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CNJ Capital and Falcon Energy

0.0

Correlation Coefficient

CNJ Capital  Falcon Energy

Pay attention - limited upside

The 3 months correlation between CNJ and Falcon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CNJ Capital Investments and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials and CNJ Capital 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 CNJ Capital Investments are associated (or correlated) with Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of CNJ Capital i.e., CNJ Capital and Falcon Energy go up and down completely randomly.

Pair Corralation between CNJ Capital and Falcon Energy

Assuming the 90 days trading horizon CNJ Capital Investments is expected to generate 1.11 times more return on investment than Falcon Energy. However, CNJ Capital is 1.11 times more volatile than Falcon Energy Materials. It trades about 0.04 of its potential returns per unit of risk. Falcon Energy Materials is currently generating about 0.0 per unit of risk. If you would invest  32.00  in CNJ Capital Investments on September 26, 2024 and sell it today you would earn a total of  14.00  from holding CNJ Capital Investments or generate 43.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CNJ Capital Investments  vs.  Falcon Energy Materials

CNJ Capital Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNJ Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CNJ Capital is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Falcon Energy Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Falcon Energy is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CNJ Capital and Falcon Energy

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

The idea behind CNJ Capital Investments and Falcon Energy Materials 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.