Correlation Between CCL Industries and ARHT Media

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

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

Diversification Opportunities for CCL Industries and ARHT Media

-0.34

Correlation Coefficient

CCL Industries  ARHT Media

Very good diversification

The 3 months correlation between CCL and ARHT is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and ARHT Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARHT Media 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 ARHT Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARHT Media has no effect on the direction of CCL Industries i.e., CCL Industries and ARHT Media go up and down completely randomly.

Pair Corralation between CCL Industries and ARHT Media

Assuming the 90 days trading horizon CCL Industries is expected to generate 0.08 times more return on investment than ARHT Media. However, CCL Industries is 12.93 times less risky than ARHT Media. It trades about 0.02 of its potential returns per unit of risk. ARHT Media is currently generating about -0.01 per unit of risk. If you would invest  7,741  in CCL Industries on September 4, 2024 and sell it today you would earn a total of  58.00  from holding CCL Industries or generate 0.75% return on investment over 90 days.

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

CCL Industries  vs.  ARHT Media

CCL Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CCL Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CCL Industries is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ARHT Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARHT Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with CCL Industries and ARHT Media

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

The idea behind CCL Industries and ARHT Media 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.