Correlation Between CCL Industries and Transcontinental

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Can any of the company-specific risk be diversified away by investing in both CCL Industries and Transcontinental 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 Transcontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Transcontinental, you can compare the effects of market volatilities on CCL Industries and Transcontinental 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 Transcontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Transcontinental.

Diversification Opportunities for CCL Industries and Transcontinental

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between CCL and Transcontinental is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental 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 Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of CCL Industries i.e., CCL Industries and Transcontinental go up and down completely randomly.

Pair Corralation between CCL Industries and Transcontinental

Assuming the 90 days trading horizon CCL Industries is expected to generate 0.63 times more return on investment than Transcontinental. However, CCL Industries is 1.59 times less risky than Transcontinental. It trades about 0.22 of its potential returns per unit of risk. Transcontinental is currently generating about 0.11 per unit of risk. If you would invest  6,822  in CCL Industries on April 25, 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 Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

CCL Industries  vs.  Transcontinental

 Performance 
       Timeline  
CCL Industries 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
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.
Transcontinental 

Risk-Adjusted Performance

OK

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

CCL Industries and Transcontinental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CCL Industries and Transcontinental

The main advantage of trading using opposite CCL Industries and Transcontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Transcontinental 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 Transcontinental will offset losses from the drop in Transcontinental's long position.
The idea behind CCL Industries and Transcontinental 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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