Correlation Between Canlan Ice and Azul SA

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

Diversification Opportunities for Canlan Ice and Azul SA

0.25

Correlation Coefficient

Canlan Ice  Azul SA

Modest diversification

The 3 months correlation between Canlan and Azul is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Azul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azul SA 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 Azul SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azul SA has no effect on the direction of Canlan Ice i.e., Canlan Ice and Azul SA go up and down completely randomly.

Pair Corralation between Canlan Ice and Azul SA

Assuming the 90 days horizon Canlan Ice is expected to generate 10.68 times less return on investment than Azul SA. But when comparing it to its historical volatility, Canlan Ice Sports is 54.69 times less risky than Azul SA. It trades about 0.13 of its potential returns per unit of risk. Azul SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  177.00  in Azul SA on December 19, 2024 and sell it today you would earn a total of  1.00  from holding Azul SA or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Canlan Ice Sports  vs.  Azul SA

Canlan Ice Sports

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 10 (%) 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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Azul SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azul SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Azul SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Canlan Ice and Azul SA

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

The idea behind Canlan Ice Sports and Azul SA 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.