Correlation Between Interfor Corp and Acadian Timber

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

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

Diversification Opportunities for Interfor Corp and Acadian Timber

-0.42

Correlation Coefficient

Interfor Corp  Acadian Timber

Very good diversification

The 3 months correlation between Interfor and Acadian is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Interfor Corp and Acadian Timber Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadian Timber Corp and Interfor Corp 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 Interfor Corp are associated (or correlated) with Acadian Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadian Timber Corp has no effect on the direction of Interfor Corp i.e., Interfor Corp and Acadian Timber go up and down completely randomly.

Pair Corralation between Interfor Corp and Acadian Timber

Assuming the 90 days trading horizon Interfor Corp is expected to under-perform the Acadian Timber. In addition to that, Interfor Corp is 4.4 times more volatile than Acadian Timber Corp. It trades about -0.02 of its total potential returns per unit of risk. Acadian Timber Corp is currently generating about 0.23 per unit of volatility. If you would invest  1,672  in Acadian Timber Corp on April 23, 2025 and sell it today you would earn a total of  139.00  from holding Acadian Timber Corp or generate 8.31% return on investment over 90 days.

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

Interfor Corp  vs.  Acadian Timber Corp

Interfor Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Interfor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Interfor Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 18 (%) 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.

Pair Trading with Interfor Corp and Acadian Timber

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

The idea behind Interfor Corp and Acadian Timber Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..