Correlation Between Canlan Ice and Sun Lif

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

Diversification Opportunities for Canlan Ice and Sun Lif

0.05

Correlation Coefficient

Canlan Ice  Sun Lif

Significant diversification

The 3 months correlation between Canlan and Sun is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Sun Lif Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Lif Non 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 Sun Lif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Lif Non has no effect on the direction of Canlan Ice i.e., Canlan Ice and Sun Lif go up and down completely randomly.

Pair Corralation between Canlan Ice and Sun Lif

Assuming the 90 days trading horizon Canlan Ice Sports is expected to under-perform the Sun Lif. But the stock apears to be less risky and, when comparing its historical volatility, Canlan Ice Sports is 1.03 times less risky than Sun Lif. The stock trades about -0.04 of its potential returns per unit of risk. The Sun Lif Non is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,909  in Sun Lif Non on December 30, 2024 and sell it today you would earn a total of  136.00  from holding Sun Lif Non or generate 7.12% 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.  Sun Lif Non

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.

Sun Lif Non

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Lif Non are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Sun Lif may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Canlan Ice and Sun Lif

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

The idea behind Canlan Ice Sports and Sun Lif Non 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.