Correlation Between AJ Plast and BG Container

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

By analyzing existing cross correlation between AJ Plast Public and BG Container Glass, you can compare the effects of market volatilities on AJ Plast and BG Container 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 AJ Plast with a short position of BG Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Plast and BG Container.

Diversification Opportunities for AJ Plast and BG Container

0.61

Correlation Coefficient

AJ Plast  BG Container

Poor diversification

The 3 months correlation between AJ Plast and BGC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AJ Plast Public and BG Container Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Container Glass and AJ Plast 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 AJ Plast Public are associated (or correlated) with BG Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Container Glass has no effect on the direction of AJ Plast i.e., AJ Plast and BG Container go up and down completely randomly.

Pair Corralation between AJ Plast and BG Container

Assuming the 90 days horizon AJ Plast is expected to generate 1.02 times less return on investment than BG Container. In addition to that, AJ Plast is 1.01 times more volatile than BG Container Glass. It trades about 0.11 of its total potential returns per unit of risk. BG Container Glass is currently generating about 0.11 per unit of volatility. If you would invest  630.00  in BG Container Glass on September 1, 2024 and sell it today you would earn a total of  135.00  from holding BG Container Glass or generate 21.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

AJ Plast Public  vs.  BG Container Glass

AJ Plast Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AJ Plast Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, AJ Plast disclosed solid returns over the last few months and may actually be approaching a breakup point.

BG Container Glass

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BG Container Glass are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, BG Container disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AJ Plast and BG Container

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

The idea behind AJ Plast Public and BG Container Glass 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.