Correlation Between PMC LABEL and Crown Seal

Can any of the company-specific risk be diversified away by investing in both PMC LABEL and Crown Seal 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 PMC LABEL and Crown Seal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PMC LABEL MATERIALS and Crown Seal Public, you can compare the effects of market volatilities on PMC LABEL and Crown Seal 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 PMC LABEL with a short position of Crown Seal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PMC LABEL and Crown Seal.

Diversification Opportunities for PMC LABEL and Crown Seal

-0.51

Correlation Coefficient

PMC LABEL  Crown Seal

Excellent diversification

The 3 months correlation between PMC and Crown is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PMC LABEL MATERIALS and Crown Seal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Seal Public and PMC LABEL 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 PMC LABEL MATERIALS are associated (or correlated) with Crown Seal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Seal Public has no effect on the direction of PMC LABEL i.e., PMC LABEL and Crown Seal go up and down completely randomly.

Pair Corralation between PMC LABEL and Crown Seal

Assuming the 90 days trading horizon PMC LABEL MATERIALS is expected to under-perform the Crown Seal. In addition to that, PMC LABEL is 2.37 times more volatile than Crown Seal Public. It trades about -0.36 of its total potential returns per unit of risk. Crown Seal Public is currently generating about -0.12 per unit of volatility. If you would invest  4,625  in Crown Seal Public on October 12, 2024 and sell it today you would lose (75.00) from holding Crown Seal Public or give up 1.62% of portfolio value over 90 days.

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

PMC LABEL MATERIALS  vs.  Crown Seal Public

PMC LABEL MATERIALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PMC LABEL MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Crown Seal Public

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Crown Seal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Crown Seal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PMC LABEL and Crown Seal

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

The idea behind PMC LABEL MATERIALS and Crown Seal Public 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.