Correlation Between Corticeira Amorim and Canfor

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Can any of the company-specific risk be diversified away by investing in both Corticeira Amorim and Canfor 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 Corticeira Amorim and Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corticeira Amorim SGPS and Canfor, you can compare the effects of market volatilities on Corticeira Amorim and Canfor 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 Corticeira Amorim with a short position of Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corticeira Amorim and Canfor.

Diversification Opportunities for Corticeira Amorim and Canfor

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Corticeira and Canfor is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Corticeira Amorim SGPS and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and Corticeira Amorim 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 Corticeira Amorim SGPS are associated (or correlated) with Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Corticeira Amorim i.e., Corticeira Amorim and Canfor go up and down completely randomly.

Pair Corralation between Corticeira Amorim and Canfor

Assuming the 90 days horizon Corticeira Amorim SGPS is expected to generate 0.53 times more return on investment than Canfor. However, Corticeira Amorim SGPS is 1.9 times less risky than Canfor. It trades about -0.15 of its potential returns per unit of risk. Canfor is currently generating about -0.11 per unit of risk. If you would invest  876.00  in Corticeira Amorim SGPS on October 12, 2024 and sell it today you would lose (78.00) from holding Corticeira Amorim SGPS or give up 8.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.33%
ValuesDaily Returns

Corticeira Amorim SGPS  vs.  Canfor

 Performance 
       Timeline  
Corticeira Amorim SGPS 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Corticeira Amorim SGPS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Canfor 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Canfor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Corticeira Amorim and Canfor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Corticeira Amorim and Canfor

The main advantage of trading using opposite Corticeira Amorim and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corticeira Amorim position performs unexpectedly, Canfor 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 will offset losses from the drop in Canfor's long position.
The idea behind Corticeira Amorim SGPS and Canfor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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