Correlation Between UPDATE SOFTWARE and Graphic Packaging

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

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

Diversification Opportunities for UPDATE SOFTWARE and Graphic Packaging

0.06

Correlation Coefficient

UPDATE SOFTWARE  Graphic Packaging

Significant diversification

The 3 months correlation between UPDATE and Graphic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding UPDATE SOFTWARE and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding and UPDATE SOFTWARE 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 UPDATE SOFTWARE are associated (or correlated) with Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of UPDATE SOFTWARE i.e., UPDATE SOFTWARE and Graphic Packaging go up and down completely randomly.

Pair Corralation between UPDATE SOFTWARE and Graphic Packaging

Assuming the 90 days trading horizon UPDATE SOFTWARE is expected to under-perform the Graphic Packaging. In addition to that, UPDATE SOFTWARE is 1.71 times more volatile than Graphic Packaging Holding. It trades about -0.11 of its total potential returns per unit of risk. Graphic Packaging Holding is currently generating about 0.07 per unit of volatility. If you would invest  2,622  in Graphic Packaging Holding on October 25, 2024 and sell it today you would earn a total of  43.00  from holding Graphic Packaging Holding or generate 1.64% return on investment over 90 days.

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

UPDATE SOFTWARE  vs.  Graphic Packaging Holding

UPDATE SOFTWARE

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UPDATE SOFTWARE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, UPDATE SOFTWARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Graphic Packaging Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with UPDATE SOFTWARE and Graphic Packaging

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

The idea behind UPDATE SOFTWARE and Graphic Packaging Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.