Correlation Between Interfor Corp and Canfor Pulp

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

By analyzing existing cross correlation between Interfor Corp and Canfor Pulp Products, you can compare the effects of market volatilities on Interfor Corp and Canfor Pulp 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 Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interfor Corp and Canfor Pulp.

Diversification Opportunities for Interfor Corp and Canfor Pulp

-0.02

Correlation Coefficient

Interfor Corp  Canfor Pulp

Good diversification

The 3 months correlation between Interfor and Canfor is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Interfor Corp and Canfor Pulp Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor Pulp Products 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 Canfor Pulp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor Pulp Products has no effect on the direction of Interfor Corp i.e., Interfor Corp and Canfor Pulp go up and down completely randomly.

Pair Corralation between Interfor Corp and Canfor Pulp

Assuming the 90 days trading horizon Interfor Corp is expected to under-perform the Canfor Pulp. But the stock apears to be less risky and, when comparing its historical volatility, Interfor Corp is 1.59 times less risky than Canfor Pulp. The stock trades about -0.01 of its potential returns per unit of risk. The Canfor Pulp Products is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Canfor Pulp Products on April 24, 2025 and sell it today you would lose (1.00) from holding Canfor Pulp Products or give up 1.43% of portfolio value over 90 days.

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

Interfor Corp  vs.  Canfor Pulp Products

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.

Canfor Pulp Products

Risk-Adjusted Performance

Weak

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

Pair Trading with Interfor Corp and Canfor Pulp

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

The idea behind Interfor Corp and Canfor Pulp Products 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.