Correlation Between Canlan Ice and Oriental Land

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

Diversification Opportunities for Canlan Ice and Oriental Land

-0.38

Correlation Coefficient

Canlan Ice  Oriental Land

Very good diversification

The 3 months correlation between Canlan and Oriental is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Oriental Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Land 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 Oriental Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Land has no effect on the direction of Canlan Ice i.e., Canlan Ice and Oriental Land go up and down completely randomly.

Pair Corralation between Canlan Ice and Oriental Land

Assuming the 90 days horizon Canlan Ice Sports is expected to generate 0.02 times more return on investment than Oriental Land. However, Canlan Ice Sports is 44.11 times less risky than Oriental Land. It trades about 0.18 of its potential returns per unit of risk. Oriental Land Co is currently generating about -0.04 per unit of risk. If you would invest  292.00  in Canlan Ice Sports on September 19, 2024 and sell it today you would earn a total of  5.00  from holding Canlan Ice Sports or generate 1.71% return on investment over 90 days.

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

Canlan Ice Sports  vs.  Oriental Land Co

Canlan Ice Sports

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Oriental Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oriental Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Canlan Ice and Oriental Land

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

The idea behind Canlan Ice Sports and Oriental Land Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.