Correlation Between Caldwell Partners and ADF

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

By analyzing existing cross correlation between Caldwell Partners International and ADF Group, you can compare the effects of market volatilities on Caldwell Partners and ADF 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 Caldwell Partners with a short position of ADF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caldwell Partners and ADF.

Diversification Opportunities for Caldwell Partners and ADF

0.6

Correlation Coefficient

Caldwell Partners  ADF

Poor diversification

The 3 months correlation between Caldwell and ADF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caldwell Partners Internationa and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group and Caldwell Partners 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 Caldwell Partners International are associated (or correlated) with ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of Caldwell Partners i.e., Caldwell Partners and ADF go up and down completely randomly.

Pair Corralation between Caldwell Partners and ADF

Assuming the 90 days trading horizon Caldwell Partners International is expected to under-perform the ADF. But the stock apears to be less risky and, when comparing its historical volatility, Caldwell Partners International is 1.34 times less risky than ADF. The stock trades about -0.15 of its potential returns per unit of risk. The ADF Group is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  575.00  in ADF Group on February 17, 2025 and sell it today you would earn a total of  189.00  from holding ADF Group or generate 32.87% return on investment over 90 days.

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

Caldwell Partners Internationa  vs.  ADF Group

Caldwell Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caldwell Partners International 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 essential indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ADF Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ADF Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ADF is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Caldwell Partners and ADF

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

The idea behind Caldwell Partners International and ADF Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.