Correlation Between Medical Packaging and General Silos

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

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

Diversification Opportunities for Medical Packaging and General Silos

0.18

Correlation Coefficient

Medical Packaging  General Silos

Average diversification

The 3 months correlation between Medical and General is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Medical Packaging and General Silos Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Silos Storage and Medical 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 Medical Packaging are associated (or correlated) with General Silos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Silos Storage has no effect on the direction of Medical Packaging i.e., Medical Packaging and General Silos go up and down completely randomly.

Pair Corralation between Medical Packaging and General Silos

Assuming the 90 days trading horizon Medical Packaging is expected to generate 1.58 times less return on investment than General Silos. In addition to that, Medical Packaging is 1.5 times more volatile than General Silos Storage. It trades about 0.03 of its total potential returns per unit of risk. General Silos Storage is currently generating about 0.06 per unit of volatility. If you would invest  12,578  in General Silos Storage on October 24, 2024 and sell it today you would earn a total of  4,230  from holding General Silos Storage or generate 33.63% return on investment over 90 days.

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

Medical Packaging  vs.  General Silos Storage

Medical Packaging

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Packaging are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Medical Packaging may actually be approaching a critical reversion point that can send shares even higher in February 2025.

General Silos Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Silos Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, General Silos is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Medical Packaging and General Silos

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

The idea behind Medical Packaging and General Silos Storage 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 Commodity Directory module to find actively traded commodities issued by global exchanges.