Correlation Between Graphic Packaging and Amcor Plc

Can any of the company-specific risk be diversified away by investing in both Graphic Packaging and Amcor Plc 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 Graphic Packaging and Amcor Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Graphic Packaging Holding and Amcor plc, you can compare the effects of market volatilities on Graphic Packaging and Amcor Plc 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 Graphic Packaging with a short position of Amcor Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphic Packaging and Amcor Plc.

Diversification Opportunities for Graphic Packaging and Amcor Plc

0.39

Correlation Coefficient

Graphic Packaging  Amcor Plc

Weak diversification

The 3 months correlation between Graphic and Amcor is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Amcor plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor plc and Graphic Packaging 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 Graphic Packaging Holding are associated (or correlated) with Amcor Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor plc has no effect on the direction of Graphic Packaging i.e., Graphic Packaging and Amcor Plc go up and down completely randomly.

Pair Corralation between Graphic Packaging and Amcor Plc

Assuming the 90 days horizon Graphic Packaging is expected to generate 1.12 times less return on investment than Amcor Plc. But when comparing it to its historical volatility, Graphic Packaging Holding is 1.36 times less risky than Amcor Plc. It trades about 0.06 of its potential returns per unit of risk. Amcor plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  826.00  in Amcor plc on October 3, 2024 and sell it today you would earn a total of  99.00  from holding Amcor plc or generate 11.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Graphic Packaging Holding  vs.  Amcor plc

Graphic Packaging Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphic Packaging Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Graphic Packaging is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Amcor plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amcor plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Amcor Plc is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Graphic Packaging and Amcor Plc

The main advantage of trading using opposite Graphic Packaging and Amcor Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphic Packaging position performs unexpectedly, Amcor Plc 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 Amcor Plc will offset losses from the drop in Amcor Plc's long position.

The idea behind Graphic Packaging Holding and Amcor plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.