Correlation Between Sappi and Canfor Pulp
Can any of the company-specific risk be diversified away by investing in both Sappi 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 Sappi and Canfor Pulp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sappi Ltd ADR and Canfor Pulp Products, you can compare the effects of market volatilities on Sappi 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 Sappi with a short position of Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sappi and Canfor Pulp.
Diversification Opportunities for Sappi and Canfor Pulp
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sappi and Canfor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sappi Ltd ADR 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 Sappi 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 Sappi Ltd ADR 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 Sappi i.e., Sappi and Canfor Pulp go up and down completely randomly.
Pair Corralation between Sappi and Canfor Pulp
If you would invest 301.00 in Sappi Ltd ADR on August 25, 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 Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Sappi Ltd ADR vs. Canfor Pulp Products
Performance |
| Timeline |
| Sappi Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Canfor Pulp Products |
Sappi and Canfor Pulp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sappi and Canfor Pulp
The main advantage of trading using opposite Sappi and Canfor Pulp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sappi 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.| Sappi vs. Nine Dragons Paper | Sappi vs. Nine Dragons Paper | Sappi vs. Mondi PLC ADR | Sappi vs. Klabin Sa A |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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