Correlation Between Canlan Ice and Drilling Tools

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

Diversification Opportunities for Canlan Ice and Drilling Tools

-0.27

Correlation Coefficient

Canlan Ice  Drilling Tools

Very good diversification

The 3 months correlation between Canlan and Drilling is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Drilling Tools International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drilling Tools Inter 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 Drilling Tools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drilling Tools Inter has no effect on the direction of Canlan Ice i.e., Canlan Ice and Drilling Tools go up and down completely randomly.

Pair Corralation between Canlan Ice and Drilling Tools

Assuming the 90 days horizon Canlan Ice Sports is expected to generate 0.03 times more return on investment than Drilling Tools. However, Canlan Ice Sports is 35.38 times less risky than Drilling Tools. It trades about 0.13 of its potential returns per unit of risk. Drilling Tools International is currently generating about -0.07 per unit of risk. If you would invest  295.00  in Canlan Ice Sports on December 20, 2024 and sell it today you would earn a total of  2.00  from holding Canlan Ice Sports or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Canlan Ice Sports  vs.  Drilling Tools International

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.

Drilling Tools Inter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Drilling Tools International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Canlan Ice and Drilling Tools

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

The idea behind Canlan Ice Sports and Drilling Tools International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..