Correlation Between SIG Combibloc and Aecon

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

By analyzing existing cross correlation between SIG Combibloc Group and Aecon Group, you can compare the effects of market volatilities on SIG Combibloc and Aecon 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 SIG Combibloc with a short position of Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIG Combibloc and Aecon.

Diversification Opportunities for SIG Combibloc and Aecon

-0.65

Correlation Coefficient

SIG Combibloc  Aecon

Excellent diversification

The 3 months correlation between SIG and Aecon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding SIG Combibloc Group and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and SIG Combibloc 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 SIG Combibloc Group are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of SIG Combibloc i.e., SIG Combibloc and Aecon go up and down completely randomly.

Pair Corralation between SIG Combibloc and Aecon

Assuming the 90 days horizon SIG Combibloc Group is expected to generate 0.3 times more return on investment than Aecon. However, SIG Combibloc Group is 3.33 times less risky than Aecon. It trades about 0.05 of its potential returns per unit of risk. Aecon Group is currently generating about -0.18 per unit of risk. If you would invest  1,962  in SIG Combibloc Group on October 12, 2024 and sell it today you would earn a total of  9.00  from holding SIG Combibloc Group or generate 0.46% return on investment over 90 days.

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

SIG Combibloc Group  vs.  Aecon Group

SIG Combibloc Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIG Combibloc Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aecon Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aecon Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aecon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SIG Combibloc and Aecon

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

The idea behind SIG Combibloc Group and Aecon Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.