Correlation Between SEALED AIR and CN MODERN
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and CN MODERN 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 SEALED AIR and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and CN MODERN DAIRY, you can compare the effects of market volatilities on SEALED AIR and CN MODERN 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 SEALED AIR with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and CN MODERN.
Diversification Opportunities for SEALED AIR and CN MODERN
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between SEALED and 07M is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and SEALED AIR 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 SEALED AIR are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of SEALED AIR i.e., SEALED AIR and CN MODERN go up and down completely randomly.
Pair Corralation between SEALED AIR and CN MODERN
Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the CN MODERN. But the stock apears to be less risky and, when comparing its historical volatility, SEALED AIR is 4.77 times less risky than CN MODERN. The stock trades about -0.36 of its potential returns per unit of risk. The CN MODERN DAIRY is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 10.00 in CN MODERN DAIRY on October 16, 2024 and sell it today you would lose (0.25) from holding CN MODERN DAIRY or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. CN MODERN DAIRY
Performance |
| Timeline |
| SEALED AIR |
| CN MODERN DAIRY |
SEALED AIR and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and CN MODERN
The main advantage of trading using opposite SEALED AIR and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| SEALED AIR vs. Highlight Communications AG | SEALED AIR vs. Entravision Communications | SEALED AIR vs. Ribbon Communications | SEALED AIR vs. ecotel communication ag |
| CN MODERN vs. China Reinsurance | CN MODERN vs. Delta Air Lines | CN MODERN vs. SEALED AIR | CN MODERN vs. Pentair plc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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