Correlation Between Smurfit Kappa and Trisura

Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa and Trisura 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 Trisura 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 Trisura Group, you can compare the effects of market volatilities on Smurfit Kappa and Trisura 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 Trisura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and Trisura.

Diversification Opportunities for Smurfit Kappa and Trisura

-0.69

Correlation Coefficient

Smurfit Kappa  Trisura

Excellent diversification

The 3 months correlation between Smurfit and Trisura is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and Trisura Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trisura Group 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 Trisura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trisura Group has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and Trisura go up and down completely randomly.

Pair Corralation between Smurfit Kappa and Trisura

Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 1.59 times more return on investment than Trisura. However, Smurfit Kappa is 1.59 times more volatile than Trisura Group. It trades about 0.06 of its potential returns per unit of risk. Trisura Group is currently generating about -0.03 per unit of risk. If you would invest  4,237  in Smurfit Kappa Group on September 22, 2024 and sell it today you would earn a total of  743.00  from holding Smurfit Kappa Group or generate 17.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.24%
Values	Daily Returns

Smurfit Kappa Group  vs.  Trisura Group

Smurfit Kappa Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit Kappa Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Smurfit Kappa reported solid returns over the last few months and may actually be approaching a breakup point.

Trisura Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trisura Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Smurfit Kappa and Trisura

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

The idea behind Smurfit Kappa Group and Trisura Group 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.