Correlation Between British American and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both British American 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 British American and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Compagnie Plastic Omnium, you can compare the effects of market volatilities on British American 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 British American with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Compagnie Plastic.
Diversification Opportunities for British American and Compagnie Plastic
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between British and Compagnie is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco 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 British American 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 British American Tobacco 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 British American i.e., British American and Compagnie Plastic go up and down completely randomly.
Pair Corralation between British American and Compagnie Plastic
Assuming the 90 days trading horizon British American Tobacco is expected to under-perform the Compagnie Plastic. But the stock apears to be less risky and, when comparing its historical volatility, British American Tobacco is 2.43 times less risky than Compagnie Plastic. The stock trades about -0.15 of its potential returns per unit of risk. The Compagnie Plastic Omnium is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 996.00 in Compagnie Plastic Omnium on October 17, 2024 and sell it today you would earn a total of 36.00 from holding Compagnie Plastic Omnium or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| British American Tobacco |
| Compagnie Plastic Omnium |
British American and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Compagnie Plastic
The main advantage of trading using opposite British American and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American 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.| British American vs. InterContinental Hotels Group | British American vs. DALATA HOTEL | British American vs. Coor Service Management | British American vs. Hyatt Hotels |
| Compagnie Plastic vs. SERI INDUSTRIAL EO | Compagnie Plastic vs. Jacquet Metal Service | Compagnie Plastic vs. British American Tobacco | Compagnie Plastic vs. JAPAN TOBACCO UNSPADR12 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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