Correlation Between Mondi PLC and IT Tech

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

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

Diversification Opportunities for Mondi PLC and IT Tech

0.53

Correlation Coefficient

Mondi PLC  IT Tech

Very weak diversification

The 3 months correlation between Mondi and ITP is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mondi PLC ADR and IT Tech Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IT Tech Packaging and Mondi PLC 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 Mondi PLC ADR are associated (or correlated) with IT Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IT Tech Packaging has no effect on the direction of Mondi PLC i.e., Mondi PLC and IT Tech go up and down completely randomly.

Pair Corralation between Mondi PLC and IT Tech

Assuming the 90 days horizon Mondi PLC ADR is expected to under-perform the IT Tech. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mondi PLC ADR is 2.51 times less risky than IT Tech. The pink sheet trades about -0.16 of its potential returns per unit of risk. The IT Tech Packaging is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  22.00  in IT Tech Packaging on September 12, 2024 and sell it today you would earn a total of  1.00  from holding IT Tech Packaging or generate 4.55% return on investment over 90 days.

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

Mondi PLC ADR  vs.  IT Tech Packaging

Mondi PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mondi PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

IT Tech Packaging

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IT Tech Packaging are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IT Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mondi PLC and IT Tech

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

The idea behind Mondi PLC ADR and IT Tech Packaging 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.