Correlation Between Amcor Plc and CCL Industries

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

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

Diversification Opportunities for Amcor Plc and CCL Industries

0.29

Correlation Coefficient

Amcor Plc  CCL Industries

Modest diversification

The 3 months correlation between Amcor and CCL is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Amcor plc and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Amcor Plc 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 Amcor plc are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Amcor Plc i.e., Amcor Plc and CCL Industries go up and down completely randomly.

Pair Corralation between Amcor Plc and CCL Industries

Assuming the 90 days trading horizon Amcor plc is expected to generate 2.05 times more return on investment than CCL Industries. However, Amcor Plc is 2.05 times more volatile than CCL Industries. It trades about -0.02 of its potential returns per unit of risk. CCL Industries is currently generating about -0.07 per unit of risk. If you would invest  925.00  in Amcor plc on September 23, 2024 and sell it today you would lose (45.00) from holding Amcor plc or give up 4.86% of portfolio value over 90 days.

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

Amcor plc  vs.  CCL Industries

Amcor plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Amcor Plc and CCL Industries

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

The idea behind Amcor plc and CCL Industries 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.