Correlation Between Flinders Resources and Canaf Investments

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Can any of the company-specific risk be diversified away by investing in both Flinders Resources and Canaf Investments 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 Flinders Resources and Canaf Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flinders Resources Limited and Canaf Investments, you can compare the effects of market volatilities on Flinders Resources and Canaf Investments 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 Flinders Resources with a short position of Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flinders Resources and Canaf Investments.

Diversification Opportunities for Flinders Resources and Canaf Investments

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Flinders and Canaf is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Flinders Resources Limited and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and Flinders Resources 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 Flinders Resources Limited are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Flinders Resources i.e., Flinders Resources and Canaf Investments go up and down completely randomly.

Pair Corralation between Flinders Resources and Canaf Investments

Assuming the 90 days horizon Flinders Resources Limited is expected to generate 1.44 times more return on investment than Canaf Investments. However, Flinders Resources is 1.44 times more volatile than Canaf Investments. It trades about 0.15 of its potential returns per unit of risk. Canaf Investments is currently generating about 0.07 per unit of risk. If you would invest  78.00  in Flinders Resources Limited on October 5, 2024 and sell it today you would earn a total of  463.00  from holding Flinders Resources Limited or generate 593.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Flinders Resources Limited  vs.  Canaf Investments

 Performance 
       Timeline  
Flinders Resources 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Flinders Resources Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Flinders Resources showed solid returns over the last few months and may actually be approaching a breakup point.
Canaf Investments 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Canaf Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Canaf Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Flinders Resources and Canaf Investments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Flinders Resources and Canaf Investments

The main advantage of trading using opposite Flinders Resources and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flinders Resources position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.
The idea behind Flinders Resources Limited and Canaf Investments 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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