Correlation Between Smurfit Kappa and LANXESS Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa and LANXESS Aktiengesellscha 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 LANXESS Aktiengesellscha 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 LANXESS Aktiengesellschaft, you can compare the effects of market volatilities on Smurfit Kappa and LANXESS Aktiengesellscha 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 LANXESS Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and LANXESS Aktiengesellscha.
Diversification Opportunities for Smurfit Kappa and LANXESS Aktiengesellscha
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Smurfit and LANXESS is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and LANXESS Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANXESS Aktiengesellscha 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 LANXESS Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANXESS Aktiengesellscha has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and LANXESS Aktiengesellscha go up and down completely randomly.
Pair Corralation between Smurfit Kappa and LANXESS Aktiengesellscha
Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 1.47 times more return on investment than LANXESS Aktiengesellscha. However, Smurfit Kappa is 1.47 times more volatile than LANXESS Aktiengesellschaft. It trades about 0.15 of its potential returns per unit of risk. LANXESS Aktiengesellschaft is currently generating about -0.17 per unit of risk. If you would invest 4,432 in Smurfit Kappa Group on August 30, 2024 and sell it today you would earn a total of 868.00 from holding Smurfit Kappa Group or generate 19.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Smurfit Kappa Group vs. LANXESS Aktiengesellschaft
Performance |
| Timeline |
| Smurfit Kappa Group |
| LANXESS Aktiengesellscha |
Smurfit Kappa and LANXESS Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit Kappa and LANXESS Aktiengesellscha
The main advantage of trading using opposite Smurfit Kappa and LANXESS Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa position performs unexpectedly, LANXESS Aktiengesellscha 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 LANXESS Aktiengesellscha will offset losses from the drop in LANXESS Aktiengesellscha's long position.| Smurfit Kappa vs. Amcor plc | Smurfit Kappa vs. Packaging of | Smurfit Kappa vs. CCL Industries | Smurfit Kappa vs. AptarGroup |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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