Correlation Between CCL Industries and Packaging

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

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

Diversification Opportunities for CCL Industries and Packaging

-0.52

Correlation Coefficient

CCL Industries  Packaging

Excellent diversification

The 3 months correlation between CCL and Packaging is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Packaging of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging and CCL Industries 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 CCL Industries are associated (or correlated) with Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging has no effect on the direction of CCL Industries i.e., CCL Industries and Packaging go up and down completely randomly.

Pair Corralation between CCL Industries and Packaging

Assuming the 90 days horizon CCL Industries is expected to generate 2.03 times more return on investment than Packaging. However, CCL Industries is 2.03 times more volatile than Packaging of. It trades about -0.18 of its potential returns per unit of risk. Packaging of is currently generating about -0.6 per unit of risk. If you would invest  5,219  in CCL Industries on September 23, 2024 and sell it today you would lose (239.00) from holding CCL Industries or give up 4.58% of portfolio value over 90 days.

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

CCL Industries  vs.  Packaging of

CCL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CCL Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Packaging

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging of are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Packaging reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CCL Industries and Packaging

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

The idea behind CCL Industries and Packaging of 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.