Correlation Between Canfor and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both Canfor and Standard Lithium 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 Canfor and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canfor and Standard Lithium, you can compare the effects of market volatilities on Canfor and Standard Lithium 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 Canfor with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor and Standard Lithium.
Diversification Opportunities for Canfor and Standard Lithium
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canfor and Standard is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and Canfor 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 Canfor are associated (or correlated) with Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of Canfor i.e., Canfor and Standard Lithium go up and down completely randomly.
Pair Corralation between Canfor and Standard Lithium
Assuming the 90 days trading horizon Canfor is expected to under-perform the Standard Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Canfor is 3.47 times less risky than Standard Lithium. The stock trades about -0.1 of its potential returns per unit of risk. The Standard Lithium is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 359.00 in Standard Lithium on July 26, 2025 and sell it today you would earn a total of 213.00 from holding Standard Lithium or generate 59.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canfor vs. Standard Lithium
Performance |
| Timeline |
| Canfor |
| Standard Lithium |
Canfor and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canfor and Standard Lithium
The main advantage of trading using opposite Canfor and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor position performs unexpectedly, Standard Lithium 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 Standard Lithium will offset losses from the drop in Standard Lithium's long position.The idea behind Canfor and Standard Lithium 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.| Standard Lithium vs. Alphamin Res | Standard Lithium vs. Altius Minerals | Standard Lithium vs. Mineros SA | Standard Lithium vs. Canfor |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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