Correlation Between LANSON-BCC INH and SEALED AIR

Can any of the company-specific risk be diversified away by investing in both LANSON-BCC INH and SEALED AIR 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 LANSON-BCC INH and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LANSON BCC INH EO and SEALED AIR , you can compare the effects of market volatilities on LANSON-BCC INH and SEALED AIR 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 LANSON-BCC INH with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANSON-BCC INH and SEALED AIR.

Diversification Opportunities for LANSON-BCC INH and SEALED AIR

-0.6

Correlation Coefficient

LANSON-BCC INH  SEALED AIR

Excellent diversification

The 3 months correlation between LANSON-BCC and SEALED is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding LANSON BCC INH EO and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and LANSON-BCC INH 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 LANSON BCC INH EO are associated (or correlated) with SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of LANSON-BCC INH i.e., LANSON-BCC INH and SEALED AIR go up and down completely randomly.

Pair Corralation between LANSON-BCC INH and SEALED AIR

Assuming the 90 days horizon LANSON BCC INH EO is expected to generate 0.78 times more return on investment than SEALED AIR. However, LANSON BCC INH EO is 1.29 times less risky than SEALED AIR. It trades about 0.02 of its potential returns per unit of risk. SEALED AIR is currently generating about -0.03 per unit of risk. If you would invest  3,059  in LANSON BCC INH EO on October 11, 2024 and sell it today you would earn a total of  351.00  from holding LANSON BCC INH EO or generate 11.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

LANSON BCC INH EO  vs.  SEALED AIR

LANSON BCC INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANSON BCC INH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SEALED AIR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SEALED AIR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with LANSON-BCC INH and SEALED AIR

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

The idea behind LANSON BCC INH EO and SEALED AIR 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..