Correlation Between Canfor Pulp and Ab Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Canfor Pulp and Ab Pennsylvania 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 Canfor Pulp and Ab Pennsylvania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canfor Pulp Products and Ab Pennsylvania Portfolio, you can compare the effects of market volatilities on Canfor Pulp and Ab Pennsylvania 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 Canfor Pulp with a short position of Ab Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor Pulp and Ab Pennsylvania.
Diversification Opportunities for Canfor Pulp and Ab Pennsylvania
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canfor and APAAX is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Canfor Pulp Products and Ab Pennsylvania Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Pennsylvania Portfolio and Canfor Pulp 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 Canfor Pulp Products are associated (or correlated) with Ab Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Pennsylvania Portfolio has no effect on the direction of Canfor Pulp i.e., Canfor Pulp and Ab Pennsylvania go up and down completely randomly.
Pair Corralation between Canfor Pulp and Ab Pennsylvania
Assuming the 90 days horizon Canfor Pulp Products is expected to under-perform the Ab Pennsylvania. In addition to that, Canfor Pulp is 5.35 times more volatile than Ab Pennsylvania Portfolio. It trades about -0.27 of its total potential returns per unit of risk. Ab Pennsylvania Portfolio is currently generating about 0.19 per unit of volatility. If you would invest 974.00 in Ab Pennsylvania Portfolio on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Ab Pennsylvania Portfolio or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canfor Pulp Products vs. Ab Pennsylvania Portfolio
Performance |
| Timeline |
| Canfor Pulp Products |
| Ab Pennsylvania Portfolio |
Canfor Pulp and Ab Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canfor Pulp and Ab Pennsylvania
The main advantage of trading using opposite Canfor Pulp and Ab Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor Pulp position performs unexpectedly, Ab Pennsylvania 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 Ab Pennsylvania will offset losses from the drop in Ab Pennsylvania's long position.| Canfor Pulp vs. South32 Limited | Canfor Pulp vs. NioCorp Developments Ltd | Canfor Pulp vs. HUMANA INC | Canfor Pulp vs. SCOR PK |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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