Correlation Between Canlan Ice and British Amer

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

Diversification Opportunities for Canlan Ice and British Amer

0.03

Correlation Coefficient

Canlan Ice  British Amer

Significant diversification

The 3 months correlation between Canlan and British is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and biOasis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on biOasis Technologies 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 British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of biOasis Technologies has no effect on the direction of Canlan Ice i.e., Canlan Ice and British Amer go up and down completely randomly.

Pair Corralation between Canlan Ice and British Amer

Assuming the 90 days trading horizon Canlan Ice is expected to generate 435.66 times less return on investment than British Amer. But when comparing it to its historical volatility, Canlan Ice Sports is 139.56 times less risky than British Amer. It trades about 0.07 of its potential returns per unit of risk. biOasis Technologies is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  118.00  in biOasis Technologies on September 4, 2024 and sell it today you would earn a total of  7.00  from holding biOasis Technologies or generate 5.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Canlan Ice Sports  vs.  biOasis Technologies

Canlan Ice Sports

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Canlan Ice may actually be approaching a critical reversion point that can send shares even higher in January 2025.

biOasis Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in biOasis Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, British Amer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canlan Ice and British Amer

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

The idea behind Canlan Ice Sports and biOasis Technologies 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.