Correlation Between Fairfax Financial and Calian Technologies

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

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

Diversification Opportunities for Fairfax Financial and Calian Technologies

-0.12

Correlation Coefficient

Fairfax Financial  Calian Technologies

Good diversification

The 3 months correlation between Fairfax and Calian is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Calian Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calian Technologies and Fairfax Financial 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 Fairfax Financial Holdings 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 Fairfax Financial i.e., Fairfax Financial and Calian Technologies go up and down completely randomly.

Pair Corralation between Fairfax Financial and Calian Technologies

Assuming the 90 days trading horizon Fairfax Financial Holdings is expected to generate 0.47 times more return on investment than Calian Technologies. However, Fairfax Financial Holdings is 2.15 times less risky than Calian Technologies. It trades about -0.04 of its potential returns per unit of risk. Calian Technologies is currently generating about -0.1 per unit of risk. If you would invest  2,400  in Fairfax Financial Holdings on September 24, 2024 and sell it today you would lose (15.00) from holding Fairfax Financial Holdings or give up 0.62% of portfolio value over 90 days.

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

Fairfax Financial Holdings  vs.  Calian Technologies

Fairfax Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical indicators, Fairfax Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Fairfax Financial and Calian Technologies

The main advantage of trading using opposite Fairfax Financial and Calian Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial 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 Fairfax Financial Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.