Correlation Between Canlan Ice and Alamos Gold

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

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

Diversification Opportunities for Canlan Ice and Alamos Gold

0.12

Correlation Coefficient

Canlan Ice  Alamos Gold

Average diversification

The 3 months correlation between Canlan and Alamos is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Alamos Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamos Gold and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with Alamos Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamos Gold has no effect on the direction of Canlan Ice i.e., Canlan Ice and Alamos Gold go up and down completely randomly.

Pair Corralation between Canlan Ice and Alamos Gold

Assuming the 90 days trading horizon Canlan Ice is expected to generate 39.54 times less return on investment than Alamos Gold. But when comparing it to its historical volatility, Canlan Ice Sports is 1.83 times less risky than Alamos Gold. It trades about 0.01 of its potential returns per unit of risk. Alamos Gold is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,595  in Alamos Gold on December 1, 2024 and sell it today you would earn a total of  711.00  from holding Alamos Gold or generate 27.4% return on investment over 90 days.

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

Canlan Ice Sports  vs.  Alamos Gold

Canlan Ice Sports

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canlan Ice Sports has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Alamos Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alamos Gold are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Alamos Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canlan Ice and Alamos Gold

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

The idea behind Canlan Ice Sports and Alamos Gold 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.