Correlation Between SEALED AIR and COMPUTERSHARE

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

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

Diversification Opportunities for SEALED AIR and COMPUTERSHARE

0.18

Correlation Coefficient

SEALED AIR  COMPUTERSHARE

Average diversification

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

Pair Corralation between SEALED AIR and COMPUTERSHARE

Assuming the 90 days trading horizon SEALED AIR is expected to generate 35.63 times less return on investment than COMPUTERSHARE. But when comparing it to its historical volatility, SEALED AIR is 1.22 times less risky than COMPUTERSHARE. It trades about 0.01 of its potential returns per unit of risk. COMPUTERSHARE is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,620  in COMPUTERSHARE on October 24, 2024 and sell it today you would earn a total of  380.00  from holding COMPUTERSHARE or generate 23.46% return on investment over 90 days.

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

SEALED AIR   vs.  COMPUTERSHARE

SEALED AIR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEALED AIR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SEALED AIR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

COMPUTERSHARE

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTERSHARE are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, COMPUTERSHARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEALED AIR and COMPUTERSHARE

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

The idea behind SEALED AIR and COMPUTERSHARE 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.