Correlation Between Smurfit Kappa and Apple
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa and Apple 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 Smurfit Kappa and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smurfit Kappa Group and Apple Inc, you can compare the effects of market volatilities on Smurfit Kappa and Apple 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 Smurfit Kappa with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and Apple.
Diversification Opportunities for Smurfit Kappa and Apple
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smurfit and Apple is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Smurfit Kappa 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 Smurfit Kappa Group are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and Apple go up and down completely randomly.
Pair Corralation between Smurfit Kappa and Apple
Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 2.58 times more return on investment than Apple. However, Smurfit Kappa is 2.58 times more volatile than Apple Inc. It trades about 0.11 of its potential returns per unit of risk. Apple Inc is currently generating about 0.25 per unit of risk. If you would invest 4,198 in Smurfit Kappa Group on September 23, 2024 and sell it today you would earn a total of 782.00 from holding Smurfit Kappa Group or generate 18.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.48% |
Values | Daily Returns |
Smurfit Kappa Group vs. Apple Inc
Performance |
Timeline |
Smurfit Kappa Group |
Apple Inc |
Smurfit Kappa and Apple Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Smurfit Kappa and Apple
The main advantage of trading using opposite Smurfit Kappa and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.Smurfit Kappa vs. Amcor plc | Smurfit Kappa vs. Amcor plc | Smurfit Kappa vs. Packaging of | Smurfit Kappa vs. Crown Holdings |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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