Correlation Between BillerudKorsnäs and Canfor Pulp
Can any of the company-specific risk be diversified away by investing in both BillerudKorsnäs and Canfor Pulp 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 BillerudKorsnäs and Canfor Pulp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BillerudKorsns AB and Canfor Pulp Products, you can compare the effects of market volatilities on BillerudKorsnäs and Canfor Pulp 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 BillerudKorsnäs with a short position of Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BillerudKorsnäs and Canfor Pulp.
Diversification Opportunities for BillerudKorsnäs and Canfor Pulp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BillerudKorsnäs and Canfor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BillerudKorsns AB and Canfor Pulp Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor Pulp Products and BillerudKorsnäs 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 BillerudKorsns AB are associated (or correlated) with Canfor Pulp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor Pulp Products has no effect on the direction of BillerudKorsnäs i.e., BillerudKorsnäs and Canfor Pulp go up and down completely randomly.
Pair Corralation between BillerudKorsnäs and Canfor Pulp
Assuming the 90 days horizon BillerudKorsns AB is expected to generate 0.13 times more return on investment than Canfor Pulp. However, BillerudKorsns AB is 7.66 times less risky than Canfor Pulp. It trades about 0.09 of its potential returns per unit of risk. Canfor Pulp Products is currently generating about 0.0 per unit of risk. If you would invest 925.00 in BillerudKorsns AB on October 26, 2024 and sell it today you would earn a total of 25.00 from holding BillerudKorsns AB or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.86% |
| Values | Daily Returns |
BillerudKorsns AB vs. Canfor Pulp Products
Performance |
| Timeline |
| BillerudKorsns AB |
| Canfor Pulp Products |
BillerudKorsnäs and Canfor Pulp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BillerudKorsnäs and Canfor Pulp
The main advantage of trading using opposite BillerudKorsnäs and Canfor Pulp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BillerudKorsnäs position performs unexpectedly, Canfor Pulp 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 Canfor Pulp will offset losses from the drop in Canfor Pulp's long position.| BillerudKorsnäs vs. Nine Dragons Paper | BillerudKorsnäs vs. Nine Dragons Paper | BillerudKorsnäs vs. Canfor Pulp Products | BillerudKorsnäs vs. Mondi PLC ADR |
| Canfor Pulp vs. Arctic Star Exploration | Canfor Pulp vs. American Clean Resources | Canfor Pulp vs. Arras Minerals Corp | Canfor Pulp vs. American Creek Resources |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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