Correlation Between CCL Industries and TECSYS
Can any of the company-specific risk be diversified away by investing in both CCL Industries and TECSYS 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 CCL Industries and TECSYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and TECSYS Inc, you can compare the effects of market volatilities on CCL Industries and TECSYS 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 CCL Industries with a short position of TECSYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and TECSYS.
Diversification Opportunities for CCL Industries and TECSYS
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CCL and TECSYS is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and TECSYS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TECSYS Inc and CCL Industries 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 CCL Industries are associated (or correlated) with TECSYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TECSYS Inc has no effect on the direction of CCL Industries i.e., CCL Industries and TECSYS go up and down completely randomly.
Pair Corralation between CCL Industries and TECSYS
Assuming the 90 days trading horizon CCL Industries is expected to under-perform the TECSYS. But the stock apears to be less risky and, when comparing its historical volatility, CCL Industries is 1.06 times less risky than TECSYS. The stock trades about -0.23 of its potential returns per unit of risk. The TECSYS Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,098 in TECSYS Inc on September 3, 2024 and sell it today you would earn a total of 379.00 from holding TECSYS Inc or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. TECSYS Inc
Performance |
| Timeline |
| CCL Industries |
| TECSYS Inc |
CCL Industries and TECSYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and TECSYS
The main advantage of trading using opposite CCL Industries and TECSYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, TECSYS 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 TECSYS will offset losses from the drop in TECSYS's long position.| CCL Industries vs. CCL Industries | CCL Industries vs. Quebecor | CCL Industries vs. Winpak | CCL Industries vs. Restaurant Brands International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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