Correlation Between AptarGroup and STRATA Skin

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

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

Diversification Opportunities for AptarGroup and STRATA Skin

0.12

Correlation Coefficient

AptarGroup  STRATA Skin

Average diversification

The 3 months correlation between AptarGroup and STRATA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AptarGroup and STRATA Skin Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATA Skin Sciences and AptarGroup 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 AptarGroup are associated (or correlated) with STRATA Skin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATA Skin Sciences has no effect on the direction of AptarGroup i.e., AptarGroup and STRATA Skin go up and down completely randomly.

Pair Corralation between AptarGroup and STRATA Skin

Considering the 90-day investment horizon AptarGroup is expected to generate 0.17 times more return on investment than STRATA Skin. However, AptarGroup is 5.81 times less risky than STRATA Skin. It trades about 0.1 of its potential returns per unit of risk. STRATA Skin Sciences is currently generating about 0.0 per unit of risk. If you would invest  10,729  in AptarGroup on August 14, 2024 and sell it today you would earn a total of  6,886  from holding AptarGroup or generate 64.18% return on investment over 90 days.

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

AptarGroup  vs.  STRATA Skin Sciences

AptarGroup

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, AptarGroup reported solid returns over the last few months and may actually be approaching a breakup point.

STRATA Skin Sciences

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STRATA Skin Sciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, STRATA Skin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AptarGroup and STRATA Skin

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

The idea behind AptarGroup and STRATA Skin Sciences 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.