Correlation Between Royal Helium and Telus Corp

Can any of the company-specific risk be diversified away by investing in both Royal Helium and Telus Corp 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 Royal Helium and Telus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Royal Helium and Telus Corp, you can compare the effects of market volatilities on Royal Helium and Telus Corp 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 Royal Helium with a short position of Telus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Helium and Telus Corp.

Diversification Opportunities for Royal Helium and Telus Corp

0.6

Correlation Coefficient

Royal Helium  Telus Corp

Poor diversification

The 3 months correlation between Royal and Telus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and Royal Helium 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 Royal Helium are associated (or correlated) with Telus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telus Corp has no effect on the direction of Royal Helium i.e., Royal Helium and Telus Corp go up and down completely randomly.

Pair Corralation between Royal Helium and Telus Corp

Assuming the 90 days horizon Royal Helium is expected to generate 207.67 times more return on investment than Telus Corp. However, Royal Helium is 207.67 times more volatile than Telus Corp. It trades about 0.27 of its potential returns per unit of risk. Telus Corp is currently generating about 0.1 per unit of risk. If you would invest  2.50  in Royal Helium on December 28, 2024 and sell it today you would earn a total of  3,506  from holding Royal Helium or generate 140260.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Royal Helium  vs.  Telus Corp

Royal Helium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Helium are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Royal Helium showed solid returns over the last few months and may actually be approaching a breakup point.

Telus Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telus Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Telus Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Royal Helium and Telus Corp

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

The idea behind Royal Helium and Telus Corp 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.