Correlation Between Smurfit Kappa and ATLANTIC PETROLPF

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

Diversification Opportunities for Smurfit Kappa and ATLANTIC PETROLPF

0.34

Correlation Coefficient

Smurfit Kappa  ATLANTIC PETROLPF

Weak diversification

The 3 months correlation between Smurfit and ATLANTIC is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and ATLANTIC PETROLPF DK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATLANTIC PETROLPF 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 ATLANTIC PETROLPF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATLANTIC PETROLPF has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and ATLANTIC PETROLPF go up and down completely randomly.

Pair Corralation between Smurfit Kappa and ATLANTIC PETROLPF

Assuming the 90 days horizon Smurfit Kappa Group is expected to under-perform the ATLANTIC PETROLPF. But the stock apears to be less risky and, when comparing its historical volatility, Smurfit Kappa Group is 3.46 times less risky than ATLANTIC PETROLPF. The stock trades about -0.14 of its potential returns per unit of risk. The ATLANTIC PETROLPF DK is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  16.00  in ATLANTIC PETROLPF DK on December 30, 2024 and sell it today you would earn a total of  5.00  from holding ATLANTIC PETROLPF DK or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Smurfit Kappa Group  vs.  ATLANTIC PETROLPF DK

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.

ATLANTIC PETROLPF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATLANTIC PETROLPF DK are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ATLANTIC PETROLPF reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smurfit Kappa and ATLANTIC PETROLPF

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

The idea behind Smurfit Kappa Group and ATLANTIC PETROLPF DK 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 Commodity Directory module to find actively traded commodities issued by global exchanges.