Correlation Between Smurfit Kappa and Pure Storage

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

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

Diversification Opportunities for Smurfit Kappa and Pure Storage

0.92

Correlation Coefficient

Smurfit Kappa  Pure Storage

Almost no diversification

The 3 months correlation between Smurfit and Pure is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage and Smurfit Kappa 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 Smurfit Kappa Group are associated (or correlated) with Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and Pure Storage go up and down completely randomly.

Pair Corralation between Smurfit Kappa and Pure Storage

Assuming the 90 days horizon Smurfit Kappa Group is expected to under-perform the Pure Storage. But the stock apears to be less risky and, when comparing its historical volatility, Smurfit Kappa Group is 1.47 times less risky than Pure Storage. The stock trades about -0.01 of its potential returns per unit of risk. The Pure Storage is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,427  in Pure Storage on December 26, 2024 and sell it today you would earn a total of  436.00  from holding Pure Storage or generate 9.85% return on investment over 90 days.

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

Smurfit Kappa Group  vs.  Pure Storage

Smurfit Kappa Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smurfit Kappa 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pure Storage

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Smurfit Kappa and Pure Storage

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

The idea behind Smurfit Kappa Group and Pure Storage 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.