Correlation Between Acadian Timber and Canfor

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

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

Diversification Opportunities for Acadian Timber and Canfor

0.61

Correlation Coefficient

Acadian Timber  Canfor

Poor diversification

The 3 months correlation between Acadian and Canfor is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Acadian Timber Corp and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and Acadian Timber 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 Acadian Timber Corp are associated (or correlated) with Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Acadian Timber i.e., Acadian Timber and Canfor go up and down completely randomly.

Pair Corralation between Acadian Timber and Canfor

Assuming the 90 days trading horizon Acadian Timber is expected to generate 1.27 times less return on investment than Canfor. But when comparing it to its historical volatility, Acadian Timber Corp is 3.29 times less risky than Canfor. It trades about 0.22 of its potential returns per unit of risk. Canfor is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,276  in Canfor on April 23, 2025 and sell it today you would earn a total of  113.00  from holding Canfor or generate 8.86% return on investment over 90 days.

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

Acadian Timber Corp  vs.  Canfor

Acadian Timber Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Acadian Timber Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Acadian Timber may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Canfor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canfor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Canfor may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Acadian Timber and Canfor

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

The idea behind Acadian Timber Corp and Canfor 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.