Correlation Between Exco Technologies and Conifex Timber
Can any of the company-specific risk be diversified away by investing in both Exco Technologies and Conifex Timber 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 Exco Technologies and Conifex Timber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exco Technologies Limited and Conifex Timber, you can compare the effects of market volatilities on Exco Technologies and Conifex Timber 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 Exco Technologies with a short position of Conifex Timber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exco Technologies and Conifex Timber.
Diversification Opportunities for Exco Technologies and Conifex Timber
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Exco and Conifex is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and Conifex Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conifex Timber and Exco Technologies 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 Exco Technologies Limited are associated (or correlated) with Conifex Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conifex Timber has no effect on the direction of Exco Technologies i.e., Exco Technologies and Conifex Timber go up and down completely randomly.
Pair Corralation between Exco Technologies and Conifex Timber
Assuming the 90 days trading horizon Exco Technologies Limited is expected to generate 0.18 times more return on investment than Conifex Timber. However, Exco Technologies Limited is 5.53 times less risky than Conifex Timber. It trades about -0.08 of its potential returns per unit of risk. Conifex Timber is currently generating about -0.11 per unit of risk. If you would invest 878.00 in Exco Technologies Limited on August 28, 2024 and sell it today you would lose (17.00) from holding Exco Technologies Limited or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exco Technologies Limited vs. Conifex Timber
Performance |
| Timeline |
| Exco Technologies |
| Conifex Timber |
Exco Technologies and Conifex Timber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exco Technologies and Conifex Timber
The main advantage of trading using opposite Exco Technologies and Conifex Timber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exco Technologies position performs unexpectedly, Conifex Timber 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 Conifex Timber will offset losses from the drop in Conifex Timber's long position.| Exco Technologies vs. Transcontinental | Exco Technologies vs. Methanex | Exco Technologies vs. Stella Jones | Exco Technologies vs. High Liner Foods |
| Conifex Timber vs. First Majestic Silver | Conifex Timber vs. Ivanhoe Energy | Conifex Timber vs. Orezone Gold Corp | Conifex Timber vs. Faraday Copper Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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