Correlation Between Canadian Utilities and CRRC
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and CRRC 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 Canadian Utilities and CRRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and CRRC Limited, you can compare the effects of market volatilities on Canadian Utilities and CRRC 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 Canadian Utilities with a short position of CRRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and CRRC.
Diversification Opportunities for Canadian Utilities and CRRC
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and CRRC is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and CRRC go up and down completely randomly.
Pair Corralation between Canadian Utilities and CRRC
Assuming the 90 days horizon Canadian Utilities is expected to generate 20.05 times less return on investment than CRRC. But when comparing it to its historical volatility, Canadian Utilities Limited is 3.68 times less risky than CRRC. It trades about 0.02 of its potential returns per unit of risk. CRRC Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in CRRC Limited on September 3, 2024 and sell it today you would earn a total of 47.00 from holding CRRC Limited or generate 335.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Canadian Utilities Limited vs. CRRC Limited
Performance |
| Timeline |
| Canadian Utilities |
| CRRC Limited |
Canadian Utilities and CRRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and CRRC
The main advantage of trading using opposite Canadian Utilities and CRRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, CRRC 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 CRRC will offset losses from the drop in CRRC's long position.| Canadian Utilities vs. MAVEN WIRELESS SWEDEN | Canadian Utilities vs. Citic Telecom International | Canadian Utilities vs. Tower One Wireless | Canadian Utilities vs. Chunghwa Telecom Co |
| CRRC vs. Superior Plus Corp | CRRC vs. NMI Holdings | CRRC vs. Origin Agritech | CRRC vs. SIVERS SEMICONDUCTORS AB |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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