Correlation Between Transport International and AptarGroup
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and AptarGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and AptarGroup, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of AptarGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and AptarGroup.
Diversification Opportunities for Transport International and AptarGroup
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transport and AptarGroup is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and AptarGroup go up and down completely randomly.
Pair Corralation between Transport International and AptarGroup
Assuming the 90 days horizon Transport International Holdings is expected to under-perform the AptarGroup. In addition to that, Transport International is 1.43 times more volatile than AptarGroup. It trades about -0.01 of its total potential returns per unit of risk. AptarGroup is currently generating about 0.01 per unit of volatility. If you would invest 15,185 in AptarGroup on October 23, 2024 and sell it today you would lose (5.00) from holding AptarGroup or give up 0.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Transport International Holdin vs. AptarGroup
Performance |
Timeline |
Transport International |
AptarGroup |
Transport International and AptarGroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Transport International and AptarGroup
The main advantage of trading using opposite Transport International and AptarGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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 Transport International Holdings 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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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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