Correlation Between Canlan Ice and Plata Latina

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

Diversification Opportunities for Canlan Ice and Plata Latina

0.39

Correlation Coefficient

Canlan Ice  Plata Latina

Weak diversification

The 3 months correlation between Canlan and Plata is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Plata Latina Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plata Latina Minerals 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 Plata Latina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plata Latina Minerals has no effect on the direction of Canlan Ice i.e., Canlan Ice and Plata Latina go up and down completely randomly.

Pair Corralation between Canlan Ice and Plata Latina

Assuming the 90 days trading horizon Canlan Ice is expected to generate 58.85 times less return on investment than Plata Latina. But when comparing it to its historical volatility, Canlan Ice Sports is 45.14 times less risky than Plata Latina. It trades about 0.22 of its potential returns per unit of risk. Plata Latina Minerals is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Plata Latina Minerals on December 3, 2024 and sell it today you would earn a total of  4.00  from holding Plata Latina Minerals or generate 400.0% return on investment over 90 days.

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

Canlan Ice Sports  vs.  Plata Latina Minerals

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.

Plata Latina Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plata Latina Minerals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Plata Latina showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canlan Ice and Plata Latina

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

The idea behind Canlan Ice Sports and Plata Latina Minerals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.