Correlation Between Canlan Ice and Diamond Fields

Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Diamond Fields 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 Diamond Fields 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 Diamond Fields Resources, you can compare the effects of market volatilities on Canlan Ice and Diamond Fields 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 Diamond Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Diamond Fields.

Diversification Opportunities for Canlan Ice and Diamond Fields

0.18

Correlation Coefficient

Canlan Ice  Diamond Fields

Average diversification

The 3 months correlation between Canlan and Diamond is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Diamond Fields Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Fields Resources 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 Diamond Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Fields Resources has no effect on the direction of Canlan Ice i.e., Canlan Ice and Diamond Fields go up and down completely randomly.

Pair Corralation between Canlan Ice and Diamond Fields

Assuming the 90 days trading horizon Canlan Ice Sports is expected to generate 0.13 times more return on investment than Diamond Fields. However, Canlan Ice Sports is 7.92 times less risky than Diamond Fields. It trades about 0.04 of its potential returns per unit of risk. Diamond Fields Resources is currently generating about -0.11 per unit of risk. If you would invest  382.00  in Canlan Ice Sports on October 22, 2024 and sell it today you would earn a total of  8.00  from holding Canlan Ice Sports or generate 2.09% 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.  Diamond Fields Resources

Canlan Ice Sports

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 2 (%) 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.

Diamond Fields Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Fields Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Canlan Ice and Diamond Fields

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

The idea behind Canlan Ice Sports and Diamond Fields Resources 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.