Correlation Between DAIRY FARM and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM 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 DAIRY FARM and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIRY FARM INTL and Compagnie Plastic Omnium, you can compare the effects of market volatilities on DAIRY FARM 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 DAIRY FARM with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Compagnie Plastic.
Diversification Opportunities for DAIRY FARM and Compagnie Plastic
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DAIRY and Compagnie is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL 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 DAIRY FARM 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 DAIRY FARM INTL 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 DAIRY FARM i.e., DAIRY FARM and Compagnie Plastic go up and down completely randomly.
Pair Corralation between DAIRY FARM and Compagnie Plastic
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 0.86 times more return on investment than Compagnie Plastic. However, DAIRY FARM INTL is 1.16 times less risky than Compagnie Plastic. It trades about 0.02 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.05 per unit of risk. If you would invest 210.00 in DAIRY FARM INTL on September 12, 2024 and sell it today you would earn a total of 12.00 from holding DAIRY FARM INTL or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| DAIRY FARM INTL |
| Compagnie Plastic Omnium |
DAIRY FARM and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and Compagnie Plastic
The main advantage of trading using opposite DAIRY FARM and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM 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 DAIRY FARM INTL 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.| Compagnie Plastic vs. TITAN MACHINERY | Compagnie Plastic vs. DAIRY FARM INTL | Compagnie Plastic vs. Sumitomo Mitsui Construction | Compagnie Plastic vs. H FARM SPA |
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 Stocks Directory module to find actively traded stocks across global markets.
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