Correlation Between CCL Industries and K Bro

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

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

Diversification Opportunities for CCL Industries and K Bro

-0.35

Correlation Coefficient

CCL Industries  K Bro

Very good diversification

The 3 months correlation between CCL and KBL is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and K Bro Linen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Bro Linen 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 K Bro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Bro Linen has no effect on the direction of CCL Industries i.e., CCL Industries and K Bro go up and down completely randomly.

Pair Corralation between CCL Industries and K Bro

Assuming the 90 days trading horizon CCL Industries is expected to generate 1.0 times more return on investment than K Bro. However, CCL Industries is 1.0 times less risky than K Bro. It trades about 0.22 of its potential returns per unit of risk. K Bro Linen is currently generating about -0.01 per unit of risk. If you would invest  6,822  in CCL Industries on April 24, 2025 and sell it today you would earn a total of  1,157  from holding CCL Industries or generate 16.96% return on investment over 90 days.

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

CCL Industries  vs.  K Bro Linen

CCL Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CCL Industries are ranked lower than 17 (%) 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.

K Bro Linen

Risk-Adjusted Performance

Very Weak

Over the last 90 days K Bro Linen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, K Bro is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CCL Industries and K Bro

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

The idea behind CCL Industries and K Bro Linen 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 Channel module to use Commodity Channel Index to analyze current equity momentum.