Correlation Between Canfor and Linamar

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

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

Diversification Opportunities for Canfor and Linamar

-0.11

Correlation Coefficient

Canfor  Linamar

Good diversification

The 3 months correlation between Canfor and Linamar is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar 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 Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Canfor i.e., Canfor and Linamar go up and down completely randomly.

Pair Corralation between Canfor and Linamar

Assuming the 90 days horizon Canfor is expected to generate 8.55 times less return on investment than Linamar. In addition to that, Canfor is 1.32 times more volatile than Linamar. It trades about 0.02 of its total potential returns per unit of risk. Linamar is currently generating about 0.2 per unit of volatility. If you would invest  4,481  in Linamar on May 21, 2025 and sell it today you would earn a total of  814.00  from holding Linamar or generate 18.17% return on investment over 90 days.

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

Canfor  vs.  Linamar

Canfor

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Canfor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Canfor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Linamar

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Linamar are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Linamar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canfor and Linamar

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

The idea behind Canfor and Linamar 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.