Correlation Between Canfor Pulp and Holmen AB

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Canfor Pulp and Holmen AB 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 Holmen AB 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 Holmen AB ADR, you can compare the effects of market volatilities on Canfor Pulp and Holmen AB 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 Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor Pulp and Holmen AB.

Diversification Opportunities for Canfor Pulp and Holmen AB

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Canfor and Holmen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canfor Pulp Products and Holmen AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB ADR 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 Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB ADR has no effect on the direction of Canfor Pulp i.e., Canfor Pulp and Holmen AB go up and down completely randomly.

Pair Corralation between Canfor Pulp and Holmen AB

Assuming the 90 days horizon Canfor Pulp Products is expected to under-perform the Holmen AB. In addition to that, Canfor Pulp is 3.77 times more volatile than Holmen AB ADR. It trades about -0.06 of its total potential returns per unit of risk. Holmen AB ADR is currently generating about 0.01 per unit of volatility. If you would invest  2,087  in Holmen AB ADR on November 1, 2024 and sell it today you would earn a total of  38.00  from holding Holmen AB ADR or generate 1.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Canfor Pulp Products  vs.  Holmen AB ADR

 Performance 
       Timeline  
Canfor Pulp Products 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Canfor Pulp Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Holmen AB ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Holmen AB ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Holmen AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Canfor Pulp and Holmen AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Canfor Pulp and Holmen AB

The main advantage of trading using opposite Canfor Pulp and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor Pulp position performs unexpectedly, Holmen AB 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 Holmen AB will offset losses from the drop in Holmen AB's long position.
The idea behind Canfor Pulp Products and Holmen AB ADR 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

Other Complementary Tools

Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
CEOs Directory
Screen CEOs from public companies around the world