Correlation Between Eastman Chemical and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Compagnie Plastic.
Diversification Opportunities for Eastman Chemical and Compagnie Plastic
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastman and Compagnie is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical i.e., Eastman Chemical and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Eastman Chemical and Compagnie Plastic
Assuming the 90 days horizon Eastman Chemical is expected to under-perform the Compagnie Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical is 2.04 times less risky than Compagnie Plastic. The stock trades about -0.03 of its potential returns per unit of risk. The Compagnie Plastic Omnium is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 891.00 in Compagnie Plastic Omnium on September 15, 2024 and sell it today you would earn a total of 108.00 from holding Compagnie Plastic Omnium or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Eastman Chemical |
| Compagnie Plastic Omnium |
Eastman Chemical and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Compagnie Plastic
The main advantage of trading using opposite Eastman Chemical and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. Monster Beverage Corp | Eastman Chemical vs. MOLSON RS BEVERAGE | Eastman Chemical vs. Fevertree Drinks PLC | Eastman Chemical vs. Auto Trader Group |
| Compagnie Plastic vs. Eastman Chemical | Compagnie Plastic vs. Perdoceo Education | Compagnie Plastic vs. CHINA EDUCATION GROUP | Compagnie Plastic vs. CAREER EDUCATION |
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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