Correlation Between Canadian Utilities and Lomiko Metals

Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Lomiko Metals 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 Canadian Utilities and Lomiko Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian Utilities Limited and Lomiko Metals, you can compare the effects of market volatilities on Canadian Utilities and Lomiko Metals 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 Canadian Utilities with a short position of Lomiko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Lomiko Metals.

Diversification Opportunities for Canadian Utilities and Lomiko Metals

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Correlation Coefficient

Canadian Utilities  Lomiko Metals

Pay attention - limited upside

The 3 months correlation between Canadian and Lomiko is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Lomiko Metals go up and down completely randomly.

Pair Corralation between Canadian Utilities and Lomiko Metals

Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.2 times more return on investment than Lomiko Metals. However, Canadian Utilities Limited is 4.92 times less risky than Lomiko Metals. It trades about 0.01 of its potential returns per unit of risk. Lomiko Metals is currently generating about -0.06 per unit of risk. If you would invest  3,478  in Canadian Utilities Limited on October 8, 2024 and sell it today you would earn a total of  7.00  from holding Canadian Utilities Limited or generate 0.2% return on investment over 90 days.

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

Canadian Utilities Limited  vs.  Lomiko Metals

Canadian Utilities

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Canadian Utilities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Canadian Utilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Lomiko Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lomiko Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Canadian Utilities and Lomiko Metals

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

The idea behind Canadian Utilities Limited and Lomiko Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.