Correlation Between Mondi PLC and Croda International

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

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

Diversification Opportunities for Mondi PLC and Croda International

0.64

Correlation Coefficient

Mondi PLC  Croda International

Poor diversification

The 3 months correlation between Mondi and Croda is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mondi PLC ADR and Croda International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croda International PLC and Mondi PLC 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 Mondi PLC ADR are associated (or correlated) with Croda International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croda International PLC has no effect on the direction of Mondi PLC i.e., Mondi PLC and Croda International go up and down completely randomly.

Pair Corralation between Mondi PLC and Croda International

Assuming the 90 days horizon Mondi PLC ADR is expected to generate 1.18 times more return on investment than Croda International. However, Mondi PLC is 1.18 times more volatile than Croda International PLC. It trades about -0.04 of its potential returns per unit of risk. Croda International PLC is currently generating about -0.14 per unit of risk. If you would invest  2,973  in Mondi PLC ADR on May 6, 2025 and sell it today you would lose (187.00) from holding Mondi PLC ADR or give up 6.29% of portfolio value over 90 days.

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

Mondi PLC ADR  vs.  Croda International PLC

Mondi PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mondi PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Mondi PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Croda International PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Croda International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mondi PLC and Croda International

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

The idea behind Mondi PLC ADR and Croda International PLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.