Correlation Between Sealed Air and Agape ATP

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

By analyzing existing cross correlation between Sealed Air and Agape ATP, you can compare the effects of market volatilities on Sealed Air and Agape ATP 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 Agape ATP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Agape ATP.

Diversification Opportunities for Sealed Air and Agape ATP

0.6

Correlation Coefficient

Sealed Air  Agape ATP

Poor diversification

The 3 months correlation between Sealed and Agape is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Agape ATP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agape ATP 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 Agape ATP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agape ATP has no effect on the direction of Sealed Air i.e., Sealed Air and Agape ATP go up and down completely randomly.

Pair Corralation between Sealed Air and Agape ATP

Considering the 90-day investment horizon Sealed Air is expected to generate 0.15 times more return on investment than Agape ATP. However, Sealed Air is 6.85 times less risky than Agape ATP. It trades about -0.01 of its potential returns per unit of risk. Agape ATP is currently generating about 0.0 per unit of risk. If you would invest  3,585  in Sealed Air on October 25, 2024 and sell it today you would lose (68.00) from holding Sealed Air or give up 1.9% of portfolio value over 90 days.

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

Sealed Air  vs.  Agape ATP

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 rather sound technical and fundamental indicators, Sealed Air is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Agape ATP

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Agape ATP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Agape ATP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sealed Air and Agape ATP

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

The idea behind Sealed Air and Agape ATP 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.