Correlation Between Canadian General and Sirona Biochem

Can any of the company-specific risk be diversified away by investing in both Canadian General and Sirona Biochem 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 Sirona Biochem 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 Sirona Biochem Corp, you can compare the effects of market volatilities on Canadian General and Sirona Biochem 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 Sirona Biochem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Sirona Biochem.

Diversification Opportunities for Canadian General and Sirona Biochem

-0.02

Correlation Coefficient

Canadian General  Sirona Biochem

Good diversification

The 3 months correlation between Canadian and Sirona is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Sirona Biochem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirona Biochem Corp 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 Sirona Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirona Biochem Corp has no effect on the direction of Canadian General i.e., Canadian General and Sirona Biochem go up and down completely randomly.

Pair Corralation between Canadian General and Sirona Biochem

Assuming the 90 days trading horizon Canadian General is expected to generate 28.27 times less return on investment than Sirona Biochem. But when comparing it to its historical volatility, Canadian General Investments is 12.6 times less risky than Sirona Biochem. It trades about 0.01 of its potential returns per unit of risk. Sirona Biochem Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Sirona Biochem Corp on October 7, 2024 and sell it today you would lose (0.50) from holding Sirona Biochem Corp or give up 7.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canadian General Investments  vs.  Sirona Biochem Corp

Canadian General Inv

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Canadian General is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sirona Biochem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirona Biochem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sirona Biochem is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Canadian General and Sirona Biochem

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

The idea behind Canadian General Investments and Sirona Biochem Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .