Correlation Between CCL Industries and Imaflex

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

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

Diversification Opportunities for CCL Industries and Imaflex

0.86

Correlation Coefficient

CCL Industries  Imaflex

Very poor diversification

The 3 months correlation between CCL and Imaflex is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Imaflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imaflex and CCL Industries 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 CCL Industries are associated (or correlated) with Imaflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imaflex has no effect on the direction of CCL Industries i.e., CCL Industries and Imaflex go up and down completely randomly.

Pair Corralation between CCL Industries and Imaflex

Assuming the 90 days trading horizon CCL Industries is expected to generate 1.53 times less return on investment than Imaflex. But when comparing it to its historical volatility, CCL Industries is 3.09 times less risky than Imaflex. It trades about 0.21 of its potential returns per unit of risk. Imaflex is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  104.00  in Imaflex on April 23, 2025 and sell it today you would earn a total of  23.00  from holding Imaflex or generate 22.12% return on investment over 90 days.

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

CCL Industries  vs.  Imaflex

CCL Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CCL Industries are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CCL Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Imaflex

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imaflex are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Imaflex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CCL Industries and Imaflex

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

The idea behind CCL Industries and Imaflex 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.