Correlation Between Acadian Timber and High Liner
Can any of the company-specific risk be diversified away by investing in both Acadian Timber and High Liner 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 Acadian Timber and High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadian Timber Corp and High Liner Foods, you can compare the effects of market volatilities on Acadian Timber and High Liner 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 Acadian Timber with a short position of High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadian Timber and High Liner.
Diversification Opportunities for Acadian Timber and High Liner
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Acadian and High is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Acadian Timber Corp and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods and Acadian Timber 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 Acadian Timber Corp are associated (or correlated) with High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Acadian Timber i.e., Acadian Timber and High Liner go up and down completely randomly.
Pair Corralation between Acadian Timber and High Liner
Assuming the 90 days trading horizon Acadian Timber is expected to generate 4.05 times less return on investment than High Liner. But when comparing it to its historical volatility, Acadian Timber Corp is 1.57 times less risky than High Liner. It trades about 0.03 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,044 in High Liner Foods on August 25, 2024 and sell it today you would earn a total of 462.00 from holding High Liner Foods or generate 44.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadian Timber Corp vs. High Liner Foods
Performance |
| Timeline |
| Acadian Timber Corp |
| High Liner Foods |
Acadian Timber and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadian Timber and High Liner
The main advantage of trading using opposite Acadian Timber and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadian Timber position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Acadian Timber vs. Bip Investment Corp | Acadian Timber vs. High Liner Foods | Acadian Timber vs. Ocumetics Technology Corp | Acadian Timber vs. Partners Value Investments |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Exco Technologies Limited |
Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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