Correlation Between Jardine Matheson and CCL Industries

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

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

Diversification Opportunities for Jardine Matheson and CCL Industries

-0.28

Correlation Coefficient

Jardine Matheson  CCL Industries

Very good diversification

The 3 months correlation between Jardine and CCL is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Jardine Matheson Holdings and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Jardine Matheson 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 Jardine Matheson Holdings are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Jardine Matheson i.e., Jardine Matheson and CCL Industries go up and down completely randomly.

Pair Corralation between Jardine Matheson and CCL Industries

Assuming the 90 days horizon Jardine Matheson Holdings is expected to generate 1.58 times more return on investment than CCL Industries. However, Jardine Matheson is 1.58 times more volatile than CCL Industries. It trades about 0.11 of its potential returns per unit of risk. CCL Industries is currently generating about -0.14 per unit of risk. If you would invest  3,462  in Jardine Matheson Holdings on October 23, 2024 and sell it today you would earn a total of  446.00  from holding Jardine Matheson Holdings or generate 12.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Jardine Matheson Holdings  vs.  CCL Industries

Jardine Matheson Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jardine Matheson Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jardine Matheson reported solid returns over the last few months and may actually be approaching a breakup point.

CCL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Jardine Matheson and CCL Industries

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

The idea behind Jardine Matheson Holdings and CCL 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.