Correlation Between South Pacific and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both South Pacific and Canaf Investments 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 South Pacific and Canaf Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Pacific Metals and Canaf Investments, you can compare the effects of market volatilities on South Pacific and Canaf Investments 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 South Pacific with a short position of Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Pacific and Canaf Investments.
Diversification Opportunities for South Pacific and Canaf Investments
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between South and Canaf is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding South Pacific Metals and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and South Pacific 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 South Pacific Metals are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of South Pacific i.e., South Pacific and Canaf Investments go up and down completely randomly.
Pair Corralation between South Pacific and Canaf Investments
Assuming the 90 days trading horizon South Pacific Metals is expected to under-perform the Canaf Investments. In addition to that, South Pacific is 1.17 times more volatile than Canaf Investments. It trades about -0.07 of its total potential returns per unit of risk. Canaf Investments is currently generating about 0.35 per unit of volatility. If you would invest 29.00 in Canaf Investments on October 12, 2024 and sell it today you would earn a total of 6.00 from holding Canaf Investments or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
South Pacific Metals vs. Canaf Investments
Performance |
| Timeline |
| South Pacific Metals |
| Canaf Investments |
South Pacific and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Pacific and Canaf Investments
The main advantage of trading using opposite South Pacific and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Pacific position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.| South Pacific vs. NextSource Materials | South Pacific vs. CVW CleanTech | South Pacific vs. Sparx Technology | South Pacific vs. T2 Metals Corp |
| Canaf Investments vs. South Pacific Metals | Canaf Investments vs. Sun Peak Metals | Canaf Investments vs. XXIX Metal Corp | Canaf Investments vs. Osisko Metals |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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