Correlation Between Empire Metals and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Empire Metals 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 Empire Metals and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Empire Metals 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 Empire Metals with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Compagnie Plastic.
Diversification Opportunities for Empire Metals and Compagnie Plastic
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empire and Compagnie is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited 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 Empire Metals 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Empire Metals and Compagnie Plastic
Assuming the 90 days trading horizon Empire Metals is expected to generate 6.83 times less return on investment than Compagnie Plastic. In addition to that, Empire Metals is 1.21 times more volatile than Compagnie Plastic Omnium. It trades about 0.02 of its total potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about 0.14 per unit of volatility. If you would invest 908.00 in Compagnie Plastic Omnium on September 19, 2024 and sell it today you would earn a total of 88.00 from holding Compagnie Plastic Omnium or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Empire Metals Limited |
| Compagnie Plastic Omnium |
Empire Metals and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Compagnie Plastic
The main advantage of trading using opposite Empire Metals and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals 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.| Empire Metals vs. Givaudan SA | Empire Metals vs. Antofagasta PLC | Empire Metals vs. Ferrexpo PLC | Empire Metals vs. Atalaya Mining |
| Compagnie Plastic vs. Samsung Electronics Co | Compagnie Plastic vs. Samsung Electronics Co | Compagnie Plastic vs. Hyundai Motor | Compagnie Plastic vs. Reliance Industries Ltd |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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