Correlation Between High Liner and Algoma Central
Can any of the company-specific risk be diversified away by investing in both High Liner and Algoma Central 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 High Liner and Algoma Central into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Algoma Central, you can compare the effects of market volatilities on High Liner and Algoma Central 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 High Liner with a short position of Algoma Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Algoma Central.
Diversification Opportunities for High Liner and Algoma Central
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between High and Algoma is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Algoma Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Central and High Liner 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 High Liner Foods are associated (or correlated) with Algoma Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Central has no effect on the direction of High Liner i.e., High Liner and Algoma Central go up and down completely randomly.
Pair Corralation between High Liner and Algoma Central
Assuming the 90 days trading horizon High Liner Foods is expected to generate 2.07 times more return on investment than Algoma Central. However, High Liner is 2.07 times more volatile than Algoma Central. It trades about 0.37 of its potential returns per unit of risk. Algoma Central is currently generating about 0.02 per unit of risk. If you would invest 1,324 in High Liner Foods on August 28, 2024 and sell it today you would earn a total of 210.00 from holding High Liner Foods or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Algoma Central
Performance |
| Timeline |
| High Liner Foods |
| Algoma Central |
High Liner and Algoma Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Algoma Central
The main advantage of trading using opposite High Liner and Algoma Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, Algoma Central 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 Algoma Central will offset losses from the drop in Algoma Central's long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| Algoma Central vs. Ritchie Bros Auctioneers | Algoma Central vs. Winpak | Algoma Central vs. North West | Algoma Central vs. Altus Group Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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