Correlation Between California Software and MAS Financial

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

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

Diversification Opportunities for California Software and MAS Financial

0.73

Correlation Coefficient

California Software  MAS Financial

Poor diversification

The 3 months correlation between California and MAS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding California Software and MAS Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAS Financial Services and California Software 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 California Software are associated (or correlated) with MAS Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAS Financial Services has no effect on the direction of California Software i.e., California Software and MAS Financial go up and down completely randomly.

Pair Corralation between California Software and MAS Financial

Assuming the 90 days trading horizon California Software is expected to generate 1.51 times more return on investment than MAS Financial. However, California Software is 1.51 times more volatile than MAS Financial Services. It trades about 0.2 of its potential returns per unit of risk. MAS Financial Services is currently generating about 0.13 per unit of risk. If you would invest  1,149  in California Software on April 24, 2025 and sell it today you would earn a total of  512.00  from holding California Software or generate 44.56% return on investment over 90 days.

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

California Software  vs.  MAS Financial Services

California Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in California Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, California Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

MAS Financial Services

Risk-Adjusted Performance

OK

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

Pair Trading with California Software and MAS Financial

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

The idea behind California Software and MAS Financial Services 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.