Correlation Between Alliance Creative and Silgan Holdings

Can any of the company-specific risk be diversified away by investing in both Alliance Creative and Silgan Holdings 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 Alliance Creative and Silgan Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alliance Creative Gr and Silgan Holdings, you can compare the effects of market volatilities on Alliance Creative and Silgan Holdings 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 Alliance Creative with a short position of Silgan Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Creative and Silgan Holdings.

Diversification Opportunities for Alliance Creative and Silgan Holdings

0.09

Correlation Coefficient

Alliance Creative  Silgan Holdings

Significant diversification

The 3 months correlation between Alliance and Silgan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Creative Gr and Silgan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgan Holdings and Alliance Creative 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 Alliance Creative Gr are associated (or correlated) with Silgan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgan Holdings has no effect on the direction of Alliance Creative i.e., Alliance Creative and Silgan Holdings go up and down completely randomly.

Pair Corralation between Alliance Creative and Silgan Holdings

Given the investment horizon of 90 days Alliance Creative Gr is expected to generate 8.64 times more return on investment than Silgan Holdings. However, Alliance Creative is 8.64 times more volatile than Silgan Holdings. It trades about 0.05 of its potential returns per unit of risk. Silgan Holdings is currently generating about 0.01 per unit of risk. If you would invest  16.00  in Alliance Creative Gr on October 3, 2024 and sell it today you would lose (9.20) from holding Alliance Creative Gr or give up 57.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Alliance Creative Gr  vs.  Silgan Holdings

Alliance Creative

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Creative Gr are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Alliance Creative showed solid returns over the last few months and may actually be approaching a breakup point.

Silgan Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silgan Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Silgan Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alliance Creative and Silgan Holdings

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

The idea behind Alliance Creative Gr and Silgan Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.