Correlation Between AptarGroup and Graphic Packaging

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

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

Diversification Opportunities for AptarGroup and Graphic Packaging

0.66

Correlation Coefficient

AptarGroup  Graphic Packaging

Poor diversification

The 3 months correlation between AptarGroup and Graphic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AptarGroup and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding 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 Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of AptarGroup i.e., AptarGroup and Graphic Packaging go up and down completely randomly.

Pair Corralation between AptarGroup and Graphic Packaging

Considering the 90-day investment horizon AptarGroup is expected to under-perform the Graphic Packaging. In addition to that, AptarGroup is 1.03 times more volatile than Graphic Packaging Holding. It trades about -0.06 of its total potential returns per unit of risk. Graphic Packaging Holding is currently generating about -0.03 per unit of volatility. If you would invest  2,701  in Graphic Packaging Holding on December 29, 2024 and sell it today you would lose (89.00) from holding Graphic Packaging Holding or give up 3.3% of portfolio value over 90 days.

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

AptarGroup  vs.  Graphic Packaging Holding

AptarGroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days AptarGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, AptarGroup is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Graphic Packaging Holding

Risk-Adjusted Performance

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 quite persistent basic indicators, Graphic Packaging is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AptarGroup and Graphic Packaging

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

The idea behind AptarGroup and Graphic Packaging Holding 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.