Correlation Between Richards Packaging and Dexterra

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

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

Diversification Opportunities for Richards Packaging and Dexterra

0.7

Correlation Coefficient

Richards Packaging  Dexterra

Poor diversification

The 3 months correlation between Richards and Dexterra is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Richards Packaging Income and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group and Richards Packaging 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 Richards Packaging Income are associated (or correlated) with Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Richards Packaging i.e., Richards Packaging and Dexterra go up and down completely randomly.

Pair Corralation between Richards Packaging and Dexterra

Assuming the 90 days trading horizon Richards Packaging is expected to generate 1.21 times less return on investment than Dexterra. But when comparing it to its historical volatility, Richards Packaging Income is 1.12 times less risky than Dexterra. It trades about 0.25 of its potential returns per unit of risk. Dexterra Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  767.00  in Dexterra Group on April 22, 2025 and sell it today you would earn a total of  179.00  from holding Dexterra Group or generate 23.34% return on investment over 90 days.

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

Richards Packaging Income  vs.  Dexterra Group

Richards Packaging Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Richards Packaging Income are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Richards Packaging sustained solid returns over the last few months and may actually be approaching a breakup point.

Dexterra Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dexterra Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dexterra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Richards Packaging and Dexterra

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

The idea behind Richards Packaging Income and Dexterra Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.