Correlation Between AptarGroup and International Paper

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

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

Diversification Opportunities for AptarGroup and International Paper

0.43

Correlation Coefficient

AptarGroup  International Paper

Very weak diversification

The 3 months correlation between AptarGroup and International is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding AptarGroup and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper and AptarGroup 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 AptarGroup are associated (or correlated) with International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of AptarGroup i.e., AptarGroup and International Paper go up and down completely randomly.

Pair Corralation between AptarGroup and International Paper

Considering the 90-day investment horizon AptarGroup is expected to generate 0.53 times more return on investment than International Paper. However, AptarGroup is 1.87 times less risky than International Paper. It trades about 0.26 of its potential returns per unit of risk. International Paper is currently generating about -0.14 per unit of risk. If you would invest  14,010  in AptarGroup on February 6, 2024 and sell it today you would earn a total of  671.00  from holding AptarGroup or generate 4.79% return on investment over 90 days.

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

AptarGroup  vs.  International Paper

AptarGroup

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, AptarGroup may actually be approaching a critical reversion point that can send shares even higher in June 2024.

International Paper

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Paper are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, International Paper may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with AptarGroup and International Paper

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

The idea behind AptarGroup and International Paper 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.