Correlation Between Compagnie Plastic and Cars
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Cars 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 Compagnie Plastic and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Plastic Omnium and Cars Inc, you can compare the effects of market volatilities on Compagnie Plastic and Cars 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 Compagnie Plastic with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Cars.
Diversification Opportunities for Compagnie Plastic and Cars
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compagnie and Cars is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Compagnie Plastic 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 Compagnie Plastic Omnium are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Cars go up and down completely randomly.
Pair Corralation between Compagnie Plastic and Cars
Assuming the 90 days trading horizon Compagnie Plastic Omnium is expected to under-perform the Cars. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie Plastic Omnium is 1.24 times less risky than Cars. The stock trades about -0.05 of its potential returns per unit of risk. The Cars Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. 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 |
Compagnie Plastic Omnium vs. Cars Inc
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| Cars Inc |
Compagnie Plastic and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and Cars
The main advantage of trading using opposite Compagnie Plastic and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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