Correlation Between CCL Industries and Codan
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Codan 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 Codan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Codan Limited, you can compare the effects of market volatilities on CCL Industries and Codan 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 Codan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Codan.
Diversification Opportunities for CCL Industries and Codan
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CCL and Codan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Codan Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codan Limited 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 Codan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codan Limited has no effect on the direction of CCL Industries i.e., CCL Industries and Codan go up and down completely randomly.
Pair Corralation between CCL Industries and Codan
Assuming the 90 days horizon CCL Industries is expected to generate 3.47 times less return on investment than Codan. But when comparing it to its historical volatility, CCL Industries is 4.72 times less risky than Codan. It trades about 0.17 of its potential returns per unit of risk. Codan Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 730.00 in Codan Limited on April 26, 2025 and sell it today you would earn a total of 329.00 from holding Codan Limited or generate 45.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CCL Industries vs. Codan Limited
Performance |
Timeline |
CCL Industries |
Codan Limited |
CCL Industries and Codan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CCL Industries and Codan
The main advantage of trading using opposite CCL Industries and Codan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Codan 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 Codan will offset losses from the drop in Codan's long position.CCL Industries vs. Cascades | CCL Industries vs. TriMas | CCL Industries vs. Myers Industries | CCL Industries vs. Reynolds Consumer Products |
Codan vs. Acorn Energy, Common | Codan vs. CCL Industries | Codan vs. Clinuvel Pharmaceuticals | Codan vs. Contact Energy Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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