Correlation Between Canadian General and Capital Drilling

Can any of the company-specific risk be diversified away by investing in both Canadian General and Capital Drilling 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 Canadian General and Capital Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian General Investments and Capital Drilling, you can compare the effects of market volatilities on Canadian General and Capital Drilling 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 Canadian General with a short position of Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Capital Drilling.

Diversification Opportunities for Canadian General and Capital Drilling

-0.3

Correlation Coefficient

Canadian General  Capital Drilling

Very good diversification

The 3 months correlation between Canadian and Capital is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling and Canadian General 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 Canadian General Investments are associated (or correlated) with Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Canadian General i.e., Canadian General and Capital Drilling go up and down completely randomly.

Pair Corralation between Canadian General and Capital Drilling

Assuming the 90 days trading horizon Canadian General Investments is expected to under-perform the Capital Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Canadian General Investments is 2.28 times less risky than Capital Drilling. The stock trades about -0.24 of its potential returns per unit of risk. The Capital Drilling is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,300  in Capital Drilling on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Capital Drilling or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Canadian General Investments  vs.  Capital Drilling

Canadian General Inv

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Canadian General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Capital Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capital Drilling is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Canadian General and Capital Drilling

The main advantage of trading using opposite Canadian General and Capital Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General position performs unexpectedly, Capital Drilling 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 Capital Drilling will offset losses from the drop in Capital Drilling's long position.

The idea behind Canadian General Investments and Capital Drilling 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 CEOs Directory module to screen CEOs from public companies around the world.