Correlation Between TCPL Packaging and International Paper

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

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

Diversification Opportunities for TCPL Packaging and International Paper

0.67

Correlation Coefficient

TCPL Packaging  International Paper

Poor diversification

The 3 months correlation between TCPL and International is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TCPL Packaging Limited and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper and TCPL 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 TCPL Packaging Limited are associated (or correlated) with International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of TCPL Packaging i.e., TCPL Packaging and International Paper go up and down completely randomly.

Pair Corralation between TCPL Packaging and International Paper

Assuming the 90 days trading horizon TCPL Packaging Limited is expected to generate 0.54 times more return on investment than International Paper. However, TCPL Packaging Limited is 1.85 times less risky than International Paper. It trades about -0.09 of its potential returns per unit of risk. International Paper is currently generating about -0.17 per unit of risk. If you would invest  346,860  in TCPL Packaging Limited on August 21, 2025 and sell it today you would lose (24,580) from holding TCPL Packaging Limited or give up 7.09% of portfolio value over 90 days.

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

TCPL Packaging Limited  vs.  International Paper

TCPL Packaging

Risk-Adjusted Performance

Weakest

Over the last 90 days TCPL Packaging Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

International Paper

Risk-Adjusted Performance

Weakest

Over the last 90 days International Paper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with TCPL Packaging and International Paper

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

The idea behind TCPL Packaging Limited and International Paper 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.