Correlation Between Homerun Resources and Canlan Ice

Can any of the company-specific risk be diversified away by investing in both Homerun Resources and Canlan Ice 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 Homerun Resources and Canlan Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Homerun Resources and Canlan Ice Sports, you can compare the effects of market volatilities on Homerun Resources and Canlan Ice 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 Homerun Resources with a short position of Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homerun Resources and Canlan Ice.

Diversification Opportunities for Homerun Resources and Canlan Ice

0.67

Correlation Coefficient

Homerun Resources  Canlan Ice

Poor diversification

The 3 months correlation between Homerun and Canlan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Homerun Resources and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and Homerun 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 Homerun Resources are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Homerun Resources i.e., Homerun Resources and Canlan Ice go up and down completely randomly.

Pair Corralation between Homerun Resources and Canlan Ice

Assuming the 90 days horizon Homerun Resources is expected to generate 1.82 times more return on investment than Canlan Ice. However, Homerun Resources is 1.82 times more volatile than Canlan Ice Sports. It trades about -0.03 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about -0.11 per unit of risk. If you would invest  128.00  in Homerun Resources on October 24, 2024 and sell it today you would lose (3.00) from holding Homerun Resources or give up 2.34% of portfolio value over 90 days.

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

Homerun Resources  vs.  Canlan Ice Sports

Homerun Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Homerun Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Homerun Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Canlan Ice Sports

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Homerun Resources and Canlan Ice

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

The idea behind Homerun Resources and Canlan Ice Sports 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.