Correlation Between Tourmaline Oil and KP Tissue

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

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

Diversification Opportunities for Tourmaline Oil and KP Tissue

0.63

Correlation Coefficient

Tourmaline Oil  KP Tissue

Poor diversification

The 3 months correlation between Tourmaline and KPT is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tourmaline Oil Corp and KP Tissue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KP Tissue and Tourmaline Oil 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 Tourmaline Oil Corp are associated (or correlated) with KP Tissue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KP Tissue has no effect on the direction of Tourmaline Oil i.e., Tourmaline Oil and KP Tissue go up and down completely randomly.

Pair Corralation between Tourmaline Oil and KP Tissue

Assuming the 90 days trading horizon Tourmaline Oil Corp is expected to under-perform the KP Tissue. In addition to that, Tourmaline Oil is 1.53 times more volatile than KP Tissue. It trades about -0.02 of its total potential returns per unit of risk. KP Tissue is currently generating about 0.22 per unit of volatility. If you would invest  792.00  in KP Tissue on April 24, 2025 and sell it today you would earn a total of  102.00  from holding KP Tissue or generate 12.88% return on investment over 90 days.

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

Tourmaline Oil Corp  vs.  KP Tissue

Tourmaline Oil Corp

Risk-Adjusted Performance

Very Weak

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

KP Tissue

Risk-Adjusted Performance

Solid

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

Pair Trading with Tourmaline Oil and KP Tissue

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

The idea behind Tourmaline Oil Corp and KP Tissue 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.