Correlation Between Graphic Packaging and AptarGroup

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

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

Diversification Opportunities for Graphic Packaging and AptarGroup

0.38

Correlation Coefficient

Graphic Packaging  AptarGroup

Weak diversification

The 3 months correlation between Graphic and AptarGroup is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Graphic Packaging 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 Graphic Packaging Holding are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Graphic Packaging i.e., Graphic Packaging and AptarGroup go up and down completely randomly.

Pair Corralation between Graphic Packaging and AptarGroup

Considering the 90-day investment horizon Graphic Packaging Holding is expected to under-perform the AptarGroup. In addition to that, Graphic Packaging is 1.35 times more volatile than AptarGroup. It trades about -0.32 of its total potential returns per unit of risk. AptarGroup is currently generating about -0.39 per unit of volatility. If you would invest  17,173  in AptarGroup on September 28, 2024 and sell it today you would lose (1,340) from holding AptarGroup or give up 7.8% of portfolio value over 90 days.

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

Graphic Packaging Holding  vs.  AptarGroup

Graphic Packaging Holding

Risk-Adjusted Performance

0 of 100

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.

AptarGroup

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Graphic Packaging and AptarGroup

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

The idea behind Graphic Packaging Holding and AptarGroup 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.