Correlation Between Choice Hotels and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Choice Hotels 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 Choice Hotels and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choice Hotels International and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Choice Hotels 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 Choice Hotels with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Compagnie Plastic.
Diversification Opportunities for Choice Hotels and Compagnie Plastic
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Choice and Compagnie is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International 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 Choice Hotels 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 Choice Hotels International 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 Choice Hotels i.e., Choice Hotels and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Choice Hotels and Compagnie Plastic
Assuming the 90 days horizon Choice Hotels International is expected to under-perform the Compagnie Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Choice Hotels International is 1.6 times less risky than Compagnie Plastic. The stock trades about -0.14 of its potential returns per unit of risk. The Compagnie Plastic Omnium is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 999.00 in Compagnie Plastic Omnium on October 13, 2024 and sell it today you would earn a total of 39.00 from holding Compagnie Plastic Omnium or generate 3.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Choice Hotels International vs. Compagnie Plastic Omnium
Performance |
Timeline |
Choice Hotels Intern |
Compagnie Plastic Omnium |
Choice Hotels and Compagnie Plastic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Choice Hotels and Compagnie Plastic
The main advantage of trading using opposite Choice Hotels and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels 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.Choice Hotels vs. SIDETRADE EO 1 | Choice Hotels vs. CarsalesCom | Choice Hotels vs. Tradeweb Markets | Choice Hotels vs. FLOW TRADERS LTD |
Compagnie Plastic vs. MHP Hotel AG | Compagnie Plastic vs. Choice Hotels International | Compagnie Plastic vs. MARKET VECTR RETAIL | Compagnie Plastic vs. CarsalesCom |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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