Correlation Between CCL Industries and Solar Alliance
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Solar Alliance 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 Solar Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Solar Alliance Energy, you can compare the effects of market volatilities on CCL Industries and Solar Alliance 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 Solar Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Solar Alliance.
Diversification Opportunities for CCL Industries and Solar Alliance
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CCL and Solar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Solar Alliance Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Alliance Energy 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 Solar Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Alliance Energy has no effect on the direction of CCL Industries i.e., CCL Industries and Solar Alliance go up and down completely randomly.
Pair Corralation between CCL Industries and Solar Alliance
Assuming the 90 days trading horizon CCL Industries is expected to generate 0.32 times more return on investment than Solar Alliance. However, CCL Industries is 3.16 times less risky than Solar Alliance. It trades about -0.08 of its potential returns per unit of risk. Solar Alliance Energy is currently generating about -0.21 per unit of risk. If you would invest 7,144 in CCL Industries on November 18, 2024 and sell it today you would lose (153.00) from holding CCL Industries or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. Solar Alliance Energy
Performance |
| Timeline |
| CCL Industries |
| Solar Alliance Energy |
CCL Industries and Solar Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Solar Alliance
The main advantage of trading using opposite CCL Industries and Solar Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Solar Alliance 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 Solar Alliance will offset losses from the drop in Solar Alliance's long position.| CCL Industries vs. Stella Jones | CCL Industries vs. Gildan Activewear | CCL Industries vs. Toromont Industries | CCL Industries vs. Waste Connections |
| Solar Alliance vs. Braille Energy Systems | Solar Alliance vs. Therma Bright | Solar Alliance vs. CryptoStar Corp | Solar Alliance vs. Manganese X Energy |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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