Correlation Between Smurfit Kappa and GREENLIGHT CAP
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa and GREENLIGHT CAP 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 Smurfit Kappa and GREENLIGHT CAP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smurfit Kappa Group and GREENLIGHT CAP RE, you can compare the effects of market volatilities on Smurfit Kappa and GREENLIGHT CAP 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 Smurfit Kappa with a short position of GREENLIGHT CAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and GREENLIGHT CAP.
Diversification Opportunities for Smurfit Kappa and GREENLIGHT CAP
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smurfit and GREENLIGHT is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and GREENLIGHT CAP RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENLIGHT CAP RE and Smurfit Kappa 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 Smurfit Kappa Group are associated (or correlated) with GREENLIGHT CAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENLIGHT CAP RE has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and GREENLIGHT CAP go up and down completely randomly.
Pair Corralation between Smurfit Kappa and GREENLIGHT CAP
Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 1.48 times more return on investment than GREENLIGHT CAP. However, Smurfit Kappa is 1.48 times more volatile than GREENLIGHT CAP RE. It trades about 0.07 of its potential returns per unit of risk. GREENLIGHT CAP RE is currently generating about 0.07 per unit of risk. If you would invest 3,935 in Smurfit Kappa Group on September 24, 2024 and sell it today you would earn a total of 1,045 from holding Smurfit Kappa Group or generate 26.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.41% |
| Values | Daily Returns |
Smurfit Kappa Group vs. GREENLIGHT CAP RE
Performance |
| Timeline |
| Smurfit Kappa Group |
| GREENLIGHT CAP RE |
Smurfit Kappa and GREENLIGHT CAP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit Kappa and GREENLIGHT CAP
The main advantage of trading using opposite Smurfit Kappa and GREENLIGHT CAP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa position performs unexpectedly, GREENLIGHT CAP 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 GREENLIGHT CAP will offset losses from the drop in GREENLIGHT CAP's long position.| Smurfit Kappa vs. Amcor plc | Smurfit Kappa vs. Amcor plc | Smurfit Kappa vs. Packaging of | Smurfit Kappa vs. Crown Holdings |
| GREENLIGHT CAP vs. COFCO Joycome Foods | GREENLIGHT CAP vs. Tower One Wireless | GREENLIGHT CAP vs. Ebro Foods SA | GREENLIGHT CAP vs. Astral Foods Limited |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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