Correlation Between Helios Fairfax and Postmedia Network

Can any of the company-specific risk be diversified away by investing in both Helios Fairfax and Postmedia Network 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 Helios Fairfax and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Helios Fairfax Partners and Postmedia Network Canada, you can compare the effects of market volatilities on Helios Fairfax and Postmedia Network 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 Helios Fairfax with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helios Fairfax and Postmedia Network.

Diversification Opportunities for Helios Fairfax and Postmedia Network

-0.34

Correlation Coefficient

Helios Fairfax  Postmedia Network

Very good diversification

The 3 months correlation between Helios and Postmedia is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Helios Fairfax Partners and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada and Helios Fairfax 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 Helios Fairfax Partners are associated (or correlated) with Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Helios Fairfax i.e., Helios Fairfax and Postmedia Network go up and down completely randomly.

Pair Corralation between Helios Fairfax and Postmedia Network

Assuming the 90 days trading horizon Helios Fairfax Partners is expected to generate 1.08 times more return on investment than Postmedia Network. However, Helios Fairfax is 1.08 times more volatile than Postmedia Network Canada. It trades about 0.06 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.01 per unit of risk. If you would invest  250.00  in Helios Fairfax Partners on September 14, 2024 and sell it today you would earn a total of  20.00  from holding Helios Fairfax Partners or generate 8.0% return on investment over 90 days.

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

Helios Fairfax Partners  vs.  Postmedia Network Canada

Helios Fairfax Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helios Fairfax Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Helios Fairfax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Postmedia Network Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Postmedia Network Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Postmedia Network is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Helios Fairfax and Postmedia Network

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

The idea behind Helios Fairfax Partners and Postmedia Network Canada 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.