Correlation Between SIG Combibloc and Covestro

Can any of the company-specific risk be diversified away by investing in both SIG Combibloc and Covestro 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 Covestro 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 Covestro AG, you can compare the effects of market volatilities on SIG Combibloc and Covestro 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 Covestro. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIG Combibloc and Covestro.

Diversification Opportunities for SIG Combibloc and Covestro

0.5

Correlation Coefficient

SIG Combibloc  Covestro

Very weak diversification

The 3 months correlation between SIG and Covestro is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SIG Combibloc Group and Covestro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covestro AG 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 Covestro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covestro AG has no effect on the direction of SIG Combibloc i.e., SIG Combibloc and Covestro go up and down completely randomly.

Pair Corralation between SIG Combibloc and Covestro

If you would invest  1,998  in SIG Combibloc Group on October 27, 2024 and sell it today you would earn a total of  38.00  from holding SIG Combibloc Group or generate 1.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

SIG Combibloc Group  vs.  Covestro AG

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 latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Covestro AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SIG Combibloc and Covestro

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

The idea behind SIG Combibloc Group and Covestro AG 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.