Correlation Between Converge Technology and Calian Technologies

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

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

Diversification Opportunities for Converge Technology and Calian Technologies

-0.59

Correlation Coefficient

Converge Technology  Calian Technologies

Excellent diversification

The 3 months correlation between Converge and Calian is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Converge Technology Solutions and Calian Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calian Technologies and Converge Technology 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 Converge Technology Solutions are associated (or correlated) with Calian Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calian Technologies has no effect on the direction of Converge Technology i.e., Converge Technology and Calian Technologies go up and down completely randomly.

Pair Corralation between Converge Technology and Calian Technologies

Assuming the 90 days trading horizon Converge Technology Solutions is expected to generate 2.5 times more return on investment than Calian Technologies. However, Converge Technology is 2.5 times more volatile than Calian Technologies. It trades about 0.04 of its potential returns per unit of risk. Calian Technologies is currently generating about -0.04 per unit of risk. If you would invest  383.00  in Converge Technology Solutions on December 2, 2024 and sell it today you would earn a total of  161.00  from holding Converge Technology Solutions or generate 42.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Converge Technology Solutions  vs.  Calian Technologies

Converge Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Technology Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Converge Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Calian Technologies

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Converge Technology and Calian Technologies

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

The idea behind Converge Technology Solutions and Calian Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.