Correlation Between Major Drilling and Canfor

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

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

Diversification Opportunities for Major Drilling and Canfor

0.59

Correlation Coefficient

Major Drilling  Canfor

Very weak diversification

The 3 months correlation between Major and Canfor is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and Major Drilling 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 Major Drilling Group 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 Major Drilling i.e., Major Drilling and Canfor go up and down completely randomly.

Pair Corralation between Major Drilling and Canfor

Assuming the 90 days trading horizon Major Drilling Group is expected to generate 0.83 times more return on investment than Canfor. However, Major Drilling Group is 1.2 times less risky than Canfor. It trades about 0.06 of its potential returns per unit of risk. Canfor is currently generating about -0.07 per unit of risk. If you would invest  868.00  in Major Drilling Group on April 22, 2025 and sell it today you would earn a total of  15.00  from holding Major Drilling Group or generate 1.73% return on investment over 90 days.

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

Major Drilling Group  vs.  Canfor

Major Drilling Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Major Drilling Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Major Drilling is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Canfor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canfor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Canfor may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Major Drilling and Canfor

The main advantage of trading using opposite Major Drilling and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling 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 Major Drilling Group 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.

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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..