Correlation Between Crown Holdings and Conrad Industries

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

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

Diversification Opportunities for Crown Holdings and Conrad Industries

0.67

Correlation Coefficient

Crown Holdings  Conrad Industries

Poor diversification

The 3 months correlation between Crown and Conrad is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and Conrad Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conrad Industries and Crown Holdings 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 Crown Holdings are associated (or correlated) with Conrad Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conrad Industries has no effect on the direction of Crown Holdings i.e., Crown Holdings and Conrad Industries go up and down completely randomly.

Pair Corralation between Crown Holdings and Conrad Industries

If you would invest  7,283  in Crown Holdings on September 29, 2024 and sell it today you would earn a total of  1,036  from holding Crown Holdings or generate 14.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.79%
Values	Daily Returns

Crown Holdings  vs.  Conrad Industries

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.

Conrad Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Crown Holdings and Conrad Industries

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

The idea behind Crown Holdings and Conrad Industries 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.