Correlation Between Compagnie Plastic and Vitec Software
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Vitec Software 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 Vitec Software 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 Vitec Software Group, you can compare the effects of market volatilities on Compagnie Plastic and Vitec Software 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 Vitec Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Vitec Software.
Diversification Opportunities for Compagnie Plastic and Vitec Software
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compagnie and Vitec is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group 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 Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Vitec Software go up and down completely randomly.
Pair Corralation between Compagnie Plastic and Vitec Software
Assuming the 90 days trading horizon Compagnie Plastic Omnium is expected to under-perform the Vitec Software. In addition to that, Compagnie Plastic is 1.2 times more volatile than Vitec Software Group. It trades about -0.05 of its total potential returns per unit of risk. Vitec Software Group is currently generating about 0.0 per unit of volatility. If you would invest 54,567 in Vitec Software Group on September 4, 2024 and sell it today you would lose (4,155) from holding Vitec Software Group or give up 7.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. Vitec Software Group
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| Vitec Software Group |
Compagnie Plastic and Vitec Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and Vitec Software
The main advantage of trading using opposite Compagnie Plastic and Vitec Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Vitec Software 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 Vitec Software will offset losses from the drop in Vitec Software's long position.| Compagnie Plastic vs. Samsung Electronics Co | Compagnie Plastic vs. Samsung Electronics Co | Compagnie Plastic vs. Hyundai Motor | Compagnie Plastic vs. Toyota Motor Corp |
| Vitec Software vs. Samsung Electronics Co | Vitec Software vs. Samsung Electronics Co | Vitec Software vs. Hyundai Motor | Vitec Software vs. Toyota Motor Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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