Correlation Between AptarGroup and Smurfit Kappa

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

By analyzing existing cross correlation between AptarGroup and Smurfit Kappa Group, you can compare the effects of market volatilities on AptarGroup and Smurfit Kappa 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 AptarGroup with a short position of Smurfit Kappa. Check out your portfolio center. Please also check ongoing floating volatility patterns of AptarGroup and Smurfit Kappa.

Diversification Opportunities for AptarGroup and Smurfit Kappa

0.73

Correlation Coefficient

AptarGroup  Smurfit Kappa

Poor diversification

The 3 months correlation between AptarGroup and Smurfit is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding AptarGroup and Smurfit Kappa Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit Kappa Group and AptarGroup 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 AptarGroup are associated (or correlated) with Smurfit Kappa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit Kappa Group has no effect on the direction of AptarGroup i.e., AptarGroup and Smurfit Kappa go up and down completely randomly.

Pair Corralation between AptarGroup and Smurfit Kappa

Assuming the 90 days horizon AptarGroup is expected to generate 1.44 times less return on investment than Smurfit Kappa. But when comparing it to its historical volatility, AptarGroup is 2.36 times less risky than Smurfit Kappa. It trades about 0.23 of its potential returns per unit of risk. Smurfit Kappa Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,074  in Smurfit Kappa Group on September 4, 2024 and sell it today you would earn a total of  1,196  from holding Smurfit Kappa Group or generate 29.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

AptarGroup  vs.  Smurfit Kappa Group

AptarGroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AptarGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Smurfit Kappa Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit Kappa Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Smurfit Kappa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AptarGroup and Smurfit Kappa

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

The idea behind AptarGroup and Smurfit Kappa Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.