Correlation Between South32 and Canfor Pulp
Can any of the company-specific risk be diversified away by investing in both South32 and Canfor Pulp 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 South32 and Canfor Pulp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 Limited and Canfor Pulp Products, you can compare the effects of market volatilities on South32 and Canfor Pulp 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 South32 with a short position of Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Canfor Pulp.
Diversification Opportunities for South32 and Canfor Pulp
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between South32 and Canfor is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding South32 Limited and Canfor Pulp Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor Pulp Products and South32 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 South32 Limited are associated (or correlated) with Canfor Pulp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor Pulp Products has no effect on the direction of South32 i.e., South32 and Canfor Pulp go up and down completely randomly.
Pair Corralation between South32 and Canfor Pulp
Assuming the 90 days horizon South32 Limited is expected to under-perform the Canfor Pulp. In addition to that, South32 is 1.36 times more volatile than Canfor Pulp Products. It trades about -0.41 of its total potential returns per unit of risk. Canfor Pulp Products is currently generating about 0.1 per unit of volatility. If you would invest 51.00 in Canfor Pulp Products on January 13, 2025 and sell it today you would earn a total of 3.00 from holding Canfor Pulp Products or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
South32 Limited vs. Canfor Pulp Products
Performance |
| Timeline |
| South32 Limited |
| Canfor Pulp Products |
South32 and Canfor Pulp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Canfor Pulp
The main advantage of trading using opposite South32 and Canfor Pulp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, Canfor Pulp 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 Canfor Pulp will offset losses from the drop in Canfor Pulp's long position.| South32 vs. Sherritt International | South32 vs. Metals X Limited | South32 vs. Anglo American PLC | South32 vs. ZincX Resources Corp |
| Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Mondi PLC ADR | Canfor Pulp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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