Correlation Between Smurfit Kappa and ITM Power
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa and ITM Power 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 ITM Power 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 ITM Power Plc, you can compare the effects of market volatilities on Smurfit Kappa and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and ITM Power.
Diversification Opportunities for Smurfit Kappa and ITM Power
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smurfit and ITM is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and ITM Power go up and down completely randomly.
Pair Corralation between Smurfit Kappa and ITM Power
Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 0.8 times more return on investment than ITM Power. However, Smurfit Kappa Group is 1.24 times less risky than ITM Power. It trades about -0.04 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.15 per unit of risk. If you would invest 5,226 in Smurfit Kappa Group on November 27, 2024 and sell it today you would lose (136.00) from holding Smurfit Kappa Group or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smurfit Kappa Group vs. ITM Power Plc
Performance |
| Timeline |
| Smurfit Kappa Group |
| ITM Power Plc |
Smurfit Kappa and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit Kappa and ITM Power
The main advantage of trading using opposite Smurfit Kappa and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Smurfit Kappa vs. Monster Beverage Corp | Smurfit Kappa vs. United Breweries Co | Smurfit Kappa vs. CanSino Biologics | Smurfit Kappa vs. Tsingtao Brewery |
| ITM Power vs. Nel ASA | ITM Power vs. Powercell Sweden | ITM Power vs. Ballard Power Systems | ITM Power vs. Plug Power |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |