Correlation Between Cars and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Cars and Compagnie Plastic 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 Cars and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Cars and Compagnie Plastic 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 Cars with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Compagnie Plastic.
Diversification Opportunities for Cars and Compagnie Plastic
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cars and Compagnie is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium and Cars 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 Cars Inc are associated (or correlated) with Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Cars i.e., Cars and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Cars and Compagnie Plastic
Assuming the 90 days trading horizon Cars Inc is expected to generate 1.24 times more return on investment than Compagnie Plastic. However, Cars is 1.24 times more volatile than Compagnie Plastic Omnium. It trades about 0.0 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.05 per unit of risk. If you would invest 2,055 in Cars Inc on September 3, 2024 and sell it today you would lose (82.00) from holding Cars Inc or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 55.47% |
| Values | Daily Returns |
Cars Inc vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Cars Inc |
| Compagnie Plastic Omnium |
Cars and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Compagnie Plastic
The main advantage of trading using opposite Cars and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.The idea behind Cars Inc and Compagnie Plastic Omnium 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.| Compagnie Plastic vs. Catalyst Media Group | Compagnie Plastic vs. CATLIN GROUP | Compagnie Plastic vs. Magnora ASA | Compagnie Plastic vs. RTW Venture Fund |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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