Correlation Between Advanced Container and Crown Holdings

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

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

Diversification Opportunities for Advanced Container and Crown Holdings

0.32

Correlation Coefficient

Advanced Container  Crown Holdings

Weak diversification

The 3 months correlation between Advanced and Crown is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Container Technologie and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Advanced Container 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 Advanced Container Technologies are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Advanced Container i.e., Advanced Container and Crown Holdings go up and down completely randomly.

Pair Corralation between Advanced Container and Crown Holdings

Given the investment horizon of 90 days Advanced Container Technologies is expected to generate 36.61 times more return on investment than Crown Holdings. However, Advanced Container is 36.61 times more volatile than Crown Holdings. It trades about 0.07 of its potential returns per unit of risk. Crown Holdings is currently generating about 0.01 per unit of risk. If you would invest  33.00  in Advanced Container Technologies on September 21, 2024 and sell it today you would lose (32.99) from holding Advanced Container Technologies or give up 99.97% of portfolio value over 90 days.

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

Advanced Container Technologie  vs.  Crown Holdings

Advanced Container

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Container Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Advanced Container and Crown Holdings

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

The idea behind Advanced Container Technologies and Crown 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.