Correlation Between Canlan Ice and MTN Group

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

Diversification Opportunities for Canlan Ice and MTN Group

-0.17

Correlation Coefficient

Canlan Ice  MTN Group

Good diversification

The 3 months correlation between Canlan and MTN is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and MTN Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group Limited 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 MTN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group Limited has no effect on the direction of Canlan Ice i.e., Canlan Ice and MTN Group go up and down completely randomly.

Pair Corralation between Canlan Ice and MTN Group

Assuming the 90 days horizon Canlan Ice is expected to generate 9.7 times less return on investment than MTN Group. But when comparing it to its historical volatility, Canlan Ice Sports is 9.44 times less risky than MTN Group. It trades about 0.23 of its potential returns per unit of risk. MTN Group Limited is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  448.00  in MTN Group Limited on October 25, 2024 and sell it today you would earn a total of  42.00  from holding MTN Group Limited or generate 9.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Canlan Ice Sports  vs.  MTN Group Limited

Canlan Ice Sports

Risk-Adjusted Performance

10 of 100

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

MTN Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTN Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Canlan Ice and MTN Group

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

The idea behind Canlan Ice Sports and MTN Group Limited 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 Stocks Directory module to find actively traded stocks across global markets.