Correlation Between Canfor Pulp and Sappi
Can any of the company-specific risk be diversified away by investing in both Canfor Pulp and Sappi 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 Sappi 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 Sappi Ltd ADR, you can compare the effects of market volatilities on Canfor Pulp and Sappi 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 Sappi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor Pulp and Sappi.
Diversification Opportunities for Canfor Pulp and Sappi
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canfor and Sappi is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Canfor Pulp Products and Sappi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sappi Ltd 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 Sappi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sappi Ltd ADR has no effect on the direction of Canfor Pulp i.e., Canfor Pulp and Sappi go up and down completely randomly.
Pair Corralation between Canfor Pulp and Sappi
If you would invest 301.00 in Sappi Ltd ADR on November 1, 2024 and sell it today you would earn a total of 0.00 from holding Sappi Ltd ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.21% |
| Values | Daily Returns |
Canfor Pulp Products vs. Sappi Ltd ADR
Performance |
| Timeline |
| Canfor Pulp Products |
| Sappi Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Canfor Pulp and Sappi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canfor Pulp and Sappi
The main advantage of trading using opposite Canfor Pulp and Sappi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor Pulp position performs unexpectedly, Sappi 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 Sappi will offset losses from the drop in Sappi's long position.| Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Mondi PLC ADR | Canfor Pulp vs. Klabin Sa A |
| Sappi vs. Nine Dragons Paper | Sappi vs. Nine Dragons Paper | Sappi vs. Mondi PLC ADR | Sappi vs. Klabin Sa A |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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