Correlation Between Canlan Ice and Emerson Radio

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

Diversification Opportunities for Canlan Ice and Emerson Radio

-0.07

Correlation Coefficient

Canlan Ice  Emerson Radio

Good diversification

The 3 months correlation between Canlan and Emerson is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Canlan Ice i.e., Canlan Ice and Emerson Radio go up and down completely randomly.

Pair Corralation between Canlan Ice and Emerson Radio

Assuming the 90 days horizon Canlan Ice Sports is expected to generate 0.04 times more return on investment than Emerson Radio. However, Canlan Ice Sports is 28.41 times less risky than Emerson Radio. It trades about 0.13 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of risk. If you would invest  277.00  in Canlan Ice Sports on September 14, 2024 and sell it today you would earn a total of  20.00  from holding Canlan Ice Sports or generate 7.22% return on investment over 90 days.

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

Canlan Ice Sports  vs.  Emerson Radio

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Emerson Radio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Canlan Ice and Emerson Radio

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

The idea behind Canlan Ice Sports and Emerson Radio 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.