Correlation Between Maple Leaf and Andlauer Healthcare

Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Andlauer Healthcare 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 Maple Leaf and Andlauer Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maple Leaf Foods and Andlauer Healthcare Gr, you can compare the effects of market volatilities on Maple Leaf and Andlauer Healthcare 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 Maple Leaf with a short position of Andlauer Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Andlauer Healthcare.

Diversification Opportunities for Maple Leaf and Andlauer Healthcare

-0.69

Correlation Coefficient

Maple Leaf  Andlauer Healthcare

Excellent diversification

The 3 months correlation between Maple and Andlauer is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Andlauer Healthcare Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andlauer Healthcare and Maple Leaf 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 Maple Leaf Foods are associated (or correlated) with Andlauer Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andlauer Healthcare has no effect on the direction of Maple Leaf i.e., Maple Leaf and Andlauer Healthcare go up and down completely randomly.

Pair Corralation between Maple Leaf and Andlauer Healthcare

Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 1.37 times more return on investment than Andlauer Healthcare. However, Maple Leaf is 1.37 times more volatile than Andlauer Healthcare Gr. It trades about 0.18 of its potential returns per unit of risk. Andlauer Healthcare Gr is currently generating about -0.11 per unit of risk. If you would invest  2,013  in Maple Leaf Foods on December 21, 2024 and sell it today you would earn a total of  486.00  from holding Maple Leaf Foods or generate 24.14% return on investment over 90 days.

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

Maple Leaf Foods  vs.  Andlauer Healthcare Gr

Maple Leaf Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Foods are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Maple Leaf displayed solid returns over the last few months and may actually be approaching a breakup point.

Andlauer Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Andlauer Healthcare Gr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Maple Leaf and Andlauer Healthcare

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

The idea behind Maple Leaf Foods and Andlauer Healthcare Gr 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.