Correlation Between Canlan Ice and Welsbach Technology

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

Diversification Opportunities for Canlan Ice and Welsbach Technology

0.0

Correlation Coefficient

Canlan Ice  Welsbach Technology

Pay attention - limited upside

The 3 months correlation between Canlan and Welsbach is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Welsbach Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welsbach Technology 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 Welsbach Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welsbach Technology has no effect on the direction of Canlan Ice i.e., Canlan Ice and Welsbach Technology go up and down completely randomly.

Pair Corralation between Canlan Ice and Welsbach Technology

Assuming the 90 days horizon Canlan Ice is expected to generate 1.02 times less return on investment than Welsbach Technology. But when comparing it to its historical volatility, Canlan Ice Sports is 2.75 times less risky than Welsbach Technology. It trades about 0.13 of its potential returns per unit of risk. Welsbach Technology Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,074  in Welsbach Technology Metals on September 12, 2024 and sell it today you would earn a total of  53.00  from holding Welsbach Technology Metals or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Canlan Ice Sports  vs.  Welsbach Technology Metals

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.

Welsbach Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welsbach Technology Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Welsbach Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Canlan Ice and Welsbach Technology

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

The idea behind Canlan Ice Sports and Welsbach Technology Metals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.