Correlation Between Canadian National and Kelso Technologies

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

By analyzing existing cross correlation between Canadian National Railway and Kelso Technologies, you can compare the effects of market volatilities on Canadian National and Kelso Technologies 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 Canadian National with a short position of Kelso Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian National and Kelso Technologies.

Diversification Opportunities for Canadian National and Kelso Technologies

-0.05

Correlation Coefficient

Canadian National  Kelso Technologies

Good diversification

The 3 months correlation between Canadian and Kelso is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Canadian National Railway and Kelso Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelso Technologies and Canadian National 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 Canadian National Railway are associated (or correlated) with Kelso Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelso Technologies has no effect on the direction of Canadian National i.e., Canadian National and Kelso Technologies go up and down completely randomly.

Pair Corralation between Canadian National and Kelso Technologies

Assuming the 90 days trading horizon Canadian National is expected to generate 19.95 times less return on investment than Kelso Technologies. But when comparing it to its historical volatility, Canadian National Railway is 3.63 times less risky than Kelso Technologies. It trades about 0.01 of its potential returns per unit of risk. Kelso Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Kelso Technologies on April 20, 2025 and sell it today you would earn a total of  3.00  from holding Kelso Technologies or generate 20.0% return on investment over 90 days.

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

Canadian National Railway  vs.  Kelso Technologies

Canadian National Railway

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian National Railway are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Canadian National is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Kelso Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kelso Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Kelso Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian National and Kelso Technologies

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

The idea behind Canadian National Railway and Kelso 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.