Correlation Between CN MODERN and Smurfit Kappa
Can any of the company-specific risk be diversified away by investing in both CN MODERN 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 CN MODERN and Smurfit Kappa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Smurfit Kappa Group, you can compare the effects of market volatilities on CN MODERN 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 CN MODERN with a short position of Smurfit Kappa. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Smurfit Kappa.
Diversification Opportunities for CN MODERN and Smurfit Kappa
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 07M and Smurfit is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY 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 CN MODERN 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 CN MODERN DAIRY 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 CN MODERN i.e., CN MODERN and Smurfit Kappa go up and down completely randomly.
Pair Corralation between CN MODERN and Smurfit Kappa
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the Smurfit Kappa. But the stock apears to be less risky and, when comparing its historical volatility, CN MODERN DAIRY is 1.47 times less risky than Smurfit Kappa. The stock trades about -0.02 of its potential returns per unit of risk. The Smurfit Kappa Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,645 in Smurfit Kappa Group on September 2, 2024 and sell it today you would earn a total of 425.00 from holding Smurfit Kappa Group or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Smurfit Kappa Group
Performance |
| Timeline |
| CN MODERN DAIRY |
| Smurfit Kappa Group |
CN MODERN and Smurfit Kappa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Smurfit Kappa
The main advantage of trading using opposite CN MODERN and Smurfit Kappa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN 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.| CN MODERN vs. SIVERS SEMICONDUCTORS AB | CN MODERN vs. Darden Restaurants | CN MODERN vs. Reliance Steel Aluminum | CN MODERN vs. Q2M Managementberatung AG |
| Smurfit Kappa vs. CN MODERN DAIRY | Smurfit Kappa vs. Mitsubishi Materials | Smurfit Kappa vs. Beyond Meat | Smurfit Kappa vs. VULCAN MATERIALS |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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