Correlation Between Canlan Ice and Abcellera Biologics

Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Abcellera Biologics 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 Canlan Ice and Abcellera Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canlan Ice Sports and Abcellera Biologics, you can compare the effects of market volatilities on Canlan Ice and Abcellera Biologics 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 Canlan Ice with a short position of Abcellera Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Abcellera Biologics.

Diversification Opportunities for Canlan Ice and Abcellera Biologics

0.38

Correlation Coefficient

Canlan Ice  Abcellera Biologics

Weak diversification

The 3 months correlation between Canlan and Abcellera is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Abcellera Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcellera Biologics and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with Abcellera Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcellera Biologics has no effect on the direction of Canlan Ice i.e., Canlan Ice and Abcellera Biologics go up and down completely randomly.

Pair Corralation between Canlan Ice and Abcellera Biologics

Assuming the 90 days horizon Canlan Ice is expected to generate 9.77 times less return on investment than Abcellera Biologics. But when comparing it to its historical volatility, Canlan Ice Sports is 25.18 times less risky than Abcellera Biologics. It trades about 0.17 of its potential returns per unit of risk. Abcellera Biologics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  252.00  in Abcellera Biologics on September 24, 2024 and sell it today you would earn a total of  33.00  from holding Abcellera Biologics or generate 13.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Canlan Ice Sports  vs.  Abcellera Biologics

Canlan Ice Sports

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Abcellera Biologics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abcellera Biologics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Abcellera Biologics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canlan Ice and Abcellera Biologics

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

The idea behind Canlan Ice Sports and Abcellera Biologics 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.