Correlation Between GLT Old and Canfor Pulp

Can any of the company-specific risk be diversified away by investing in both GLT Old and Canfor Pulp 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 GLT Old and Canfor Pulp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GLT Old and Canfor Pulp Products, you can compare the effects of market volatilities on GLT Old and Canfor Pulp 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 GLT Old with a short position of Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLT Old and Canfor Pulp.

Diversification Opportunities for GLT Old and Canfor Pulp

-0.02

Correlation Coefficient

GLT Old  Canfor Pulp

Good diversification

The 3 months correlation between GLT and Canfor is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding GLT Old and Canfor Pulp Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor Pulp Products and GLT Old 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 GLT Old are associated (or correlated) with Canfor Pulp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor Pulp Products has no effect on the direction of GLT Old i.e., GLT Old and Canfor Pulp go up and down completely randomly.

Pair Corralation between GLT Old and Canfor Pulp

Considering the 90-day investment horizon GLT Old is expected to under-perform the Canfor Pulp. But the stock apears to be less risky and, when comparing its historical volatility, GLT Old is 1.19 times less risky than Canfor Pulp. The stock trades about -0.21 of its potential returns per unit of risk. The Canfor Pulp Products is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Canfor Pulp Products on October 25, 2024 and sell it today you would lose (7.00) from holding Canfor Pulp Products or give up 10.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	13.56%
Values	Daily Returns

GLT Old  vs.  Canfor Pulp Products

GLT Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLT Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Canfor Pulp Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canfor Pulp Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canfor Pulp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GLT Old and Canfor Pulp

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

The idea behind GLT Old and Canfor Pulp Products 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.