Correlation Between Royal Helium and Corus Entertainment

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

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

Diversification Opportunities for Royal Helium and Corus Entertainment

0.86

Correlation Coefficient

Royal Helium  Corus Entertainment

Very poor diversification

The 3 months correlation between Royal and Corus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium and Corus Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corus Entertainment 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 Corus Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corus Entertainment has no effect on the direction of Royal Helium i.e., Royal Helium and Corus Entertainment go up and down completely randomly.

Pair Corralation between Royal Helium and Corus Entertainment

Assuming the 90 days horizon Royal Helium is expected to under-perform the Corus Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Royal Helium is 1.04 times less risky than Corus Entertainment. The stock trades about -0.01 of its potential returns per unit of risk. The Corus Entertainment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Corus Entertainment on September 3, 2024 and sell it today you would lose (2.00) from holding Corus Entertainment or give up 14.29% of portfolio value over 90 days.

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

Royal Helium  vs.  Corus Entertainment

Royal Helium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Helium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Royal Helium is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Corus Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Royal Helium and Corus Entertainment

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

The idea behind Royal Helium and Corus Entertainment 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..