Correlation Between Crown Holdings and AptarGroup

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

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

Diversification Opportunities for Crown Holdings and AptarGroup

0.73

Correlation Coefficient

Crown Holdings  AptarGroup

Poor diversification

The 3 months correlation between Crown and AptarGroup is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Crown Holdings 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 Crown Holdings 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 Crown Holdings i.e., Crown Holdings and AptarGroup go up and down completely randomly.

Pair Corralation between Crown Holdings and AptarGroup

Assuming the 90 days horizon Crown Holdings is expected to generate 5.57 times less return on investment than AptarGroup. But when comparing it to its historical volatility, Crown Holdings is 1.05 times less risky than AptarGroup. It trades about 0.04 of its potential returns per unit of risk. AptarGroup is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  13,560  in AptarGroup on September 12, 2024 and sell it today you would earn a total of  2,630  from holding AptarGroup or generate 19.4% return on investment over 90 days.

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

Crown Holdings  vs.  AptarGroup

Crown Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Crown Holdings 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

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AptarGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crown Holdings and AptarGroup

The main advantage of trading using opposite Crown Holdings and AptarGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Holdings 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 Crown Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.