Correlation Between Compagnie Plastic and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Summit Materials 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 Summit Materials 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 Summit Materials Cl, you can compare the effects of market volatilities on Compagnie Plastic and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Summit Materials.
Diversification Opportunities for Compagnie Plastic and Summit Materials
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compagnie and Summit is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Summit Materials go up and down completely randomly.
Pair Corralation between Compagnie Plastic and Summit Materials
Assuming the 90 days trading horizon Compagnie Plastic Omnium is expected to under-perform the Summit Materials. In addition to that, Compagnie Plastic is 1.09 times more volatile than Summit Materials Cl. It trades about -0.06 of its total potential returns per unit of risk. Summit Materials Cl is currently generating about 0.24 per unit of volatility. If you would invest 3,897 in Summit Materials Cl on August 30, 2024 and sell it today you would earn a total of 1,195 from holding Summit Materials Cl or generate 30.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. Summit Materials Cl
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| Summit Materials |
Compagnie Plastic and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and Summit Materials
The main advantage of trading using opposite Compagnie Plastic and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Compagnie Plastic vs. Tungsten West PLC | Compagnie Plastic vs. Argo Group Limited | Compagnie Plastic vs. Hardide PLC | Compagnie Plastic vs. Versarien PLC |
| Summit Materials vs. Tungsten West PLC | Summit Materials vs. Argo Group Limited | Summit Materials vs. Hardide PLC | Summit Materials vs. Versarien PLC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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