Correlation Between CARDINAL HEALTH and Compagnie Plastic

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Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH 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 CARDINAL HEALTH and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and Compagnie Plastic Omnium, you can compare the effects of market volatilities on CARDINAL HEALTH 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 CARDINAL HEALTH with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and Compagnie Plastic.

Diversification Opportunities for CARDINAL HEALTH and Compagnie Plastic

CARDINALCompagnieDiversified AwayCARDINALCompagnieDiversified Away100%
0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between CARDINAL and Compagnie is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH 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 CARDINAL HEALTH 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 CARDINAL HEALTH 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 CARDINAL HEALTH i.e., CARDINAL HEALTH and Compagnie Plastic go up and down completely randomly.

Pair Corralation between CARDINAL HEALTH and Compagnie Plastic

Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.51 times more return on investment than Compagnie Plastic. However, CARDINAL HEALTH is 1.98 times less risky than Compagnie Plastic. It trades about 0.1 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.02 per unit of risk. If you would invest  6,747  in CARDINAL HEALTH on November 22, 2024 and sell it today you would earn a total of  5,338  from holding CARDINAL HEALTH or generate 79.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

CARDINAL HEALTH  vs.  Compagnie Plastic Omnium

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505101520
JavaScript chart by amCharts 3.21.15CLH EZM
       Timeline  
CARDINAL HEALTH 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, CARDINAL HEALTH is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb110112114116118120122124
Compagnie Plastic Omnium 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Compagnie Plastic reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb88.599.51010.511

CARDINAL HEALTH and Compagnie Plastic Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.38-2.53-1.68-0.830.00.851.732.63.484.36 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15CLH EZM
       Returns  

Pair Trading with CARDINAL HEALTH and Compagnie Plastic

The main advantage of trading using opposite CARDINAL HEALTH and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH 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 CARDINAL HEALTH 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.
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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 Stocks Directory module to find actively traded stocks across global markets.

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