Correlation Between Greif Bros and AptarGroup

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

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

Diversification Opportunities for Greif Bros and AptarGroup

0.4

Correlation Coefficient

Greif Bros  AptarGroup

Very weak diversification

The 3 months correlation between Greif and AptarGroup is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Greif Bros and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Greif Bros 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 Greif Bros are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Greif Bros i.e., Greif Bros and AptarGroup go up and down completely randomly.

Pair Corralation between Greif Bros and AptarGroup

Considering the 90-day investment horizon Greif Bros is expected to under-perform the AptarGroup. In addition to that, Greif Bros is 1.98 times more volatile than AptarGroup. It trades about -0.25 of its total potential returns per unit of risk. AptarGroup is currently generating about -0.16 per unit of volatility. If you would invest  14,320  in AptarGroup on January 26, 2024 and sell it today you would lose (319.00) from holding AptarGroup or give up 2.23% of portfolio value over 90 days.

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

Greif Bros  vs.  AptarGroup

Greif Bros

Risk-Adjusted Performance

0 of 100

Very Weak

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

AptarGroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 8 (%) 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 May 2024.

Pair Trading with Greif Bros and AptarGroup

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

The idea behind Greif Bros and AptarGroup 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.