Correlation Between Calibre Mining and Smurfit Kappa

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

By analyzing existing cross correlation between Calibre Mining Corp and Smurfit Kappa Group, you can compare the effects of market volatilities on Calibre Mining and Smurfit Kappa 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 Calibre Mining with a short position of Smurfit Kappa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calibre Mining and Smurfit Kappa.

Diversification Opportunities for Calibre Mining and Smurfit Kappa

-0.62

Correlation Coefficient

Calibre Mining  Smurfit Kappa

Excellent diversification

The 3 months correlation between Calibre and Smurfit is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Calibre Mining Corp and Smurfit Kappa Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit Kappa Group and Calibre Mining 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 Calibre Mining Corp are associated (or correlated) with Smurfit Kappa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit Kappa Group has no effect on the direction of Calibre Mining i.e., Calibre Mining and Smurfit Kappa go up and down completely randomly.

Pair Corralation between Calibre Mining and Smurfit Kappa

Assuming the 90 days trading horizon Calibre Mining Corp is expected to generate 1.59 times more return on investment than Smurfit Kappa. However, Calibre Mining is 1.59 times more volatile than Smurfit Kappa Group. It trades about -0.12 of its potential returns per unit of risk. Smurfit Kappa Group is currently generating about -0.2 per unit of risk. If you would invest  156.00  in Calibre Mining Corp on September 22, 2024 and sell it today you would lose (11.00) from holding Calibre Mining Corp or give up 7.05% of portfolio value over 90 days.

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

Calibre Mining Corp  vs.  Smurfit Kappa Group

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Calibre Mining and Smurfit Kappa

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

The idea behind Calibre Mining Corp and Smurfit Kappa 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.