Correlation Between CNVISION MEDIA and Smurfit Kappa

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

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

Diversification Opportunities for CNVISION MEDIA and Smurfit Kappa

-0.14

Correlation Coefficient

CNVISION MEDIA  Smurfit Kappa

Good diversification

The 3 months correlation between CNVISION and Smurfit is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CNVISION MEDIA 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 CNVISION MEDIA 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 CNVISION MEDIA 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 CNVISION MEDIA i.e., CNVISION MEDIA and Smurfit Kappa go up and down completely randomly.

Pair Corralation between CNVISION MEDIA and Smurfit Kappa

Assuming the 90 days trading horizon CNVISION MEDIA is expected to generate 48.9 times less return on investment than Smurfit Kappa. In addition to that, CNVISION MEDIA is 1.1 times more volatile than Smurfit Kappa Group. It trades about 0.0 of its total potential returns per unit of risk. Smurfit Kappa Group is currently generating about 0.13 per unit of volatility. If you would invest  4,213  in Smurfit Kappa Group on October 4, 2024 and sell it today you would earn a total of  957.00  from holding Smurfit Kappa Group or generate 22.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

CNVISION MEDIA  vs.  Smurfit Kappa Group

CNVISION MEDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNVISION MEDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CNVISION MEDIA is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Smurfit Kappa Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit Kappa Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Smurfit Kappa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNVISION MEDIA and Smurfit Kappa

The main advantage of trading using opposite CNVISION MEDIA and Smurfit Kappa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNVISION MEDIA 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 CNVISION MEDIA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.