Correlation Between Amcor Plc and AptarGroup

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

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

Diversification Opportunities for Amcor Plc and AptarGroup

-0.2

Correlation Coefficient

Amcor Plc  AptarGroup

Good diversification

The 3 months correlation between Amcor and AptarGroup is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Amcor plc and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup 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 AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Amcor Plc i.e., Amcor Plc and AptarGroup go up and down completely randomly.

Pair Corralation between Amcor Plc and AptarGroup

Assuming the 90 days trading horizon Amcor plc is expected to under-perform the AptarGroup. In addition to that, Amcor Plc is 1.06 times more volatile than AptarGroup. It trades about -0.38 of its total potential returns per unit of risk. AptarGroup is currently generating about -0.29 per unit of volatility. If you would invest  16,240  in AptarGroup on September 23, 2024 and sell it today you would lose (990.00) from holding AptarGroup or give up 6.1% of portfolio value over 90 days.

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

Amcor plc  vs.  AptarGroup

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.

AptarGroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AptarGroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Amcor Plc and AptarGroup

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

The idea behind Amcor plc and AptarGroup 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.