Correlation Between Compagnie Plastic and British American
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and British American 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 Compagnie Plastic and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Plastic Omnium and British American Tobacco, you can compare the effects of market volatilities on Compagnie Plastic and British American 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 Compagnie Plastic with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and British American.
Diversification Opportunities for Compagnie Plastic and British American
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compagnie and British is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Compagnie Plastic 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 Compagnie Plastic Omnium are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and British American go up and down completely randomly.
Pair Corralation between Compagnie Plastic and British American
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 2.66 times more return on investment than British American. However, Compagnie Plastic is 2.66 times more volatile than British American Tobacco. It trades about 0.16 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.05 per unit of risk. If you would invest 1,001 in Compagnie Plastic Omnium on October 25, 2024 and sell it today you would earn a total of 65.00 from holding Compagnie Plastic Omnium or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. British American Tobacco
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| British American Tobacco |
Compagnie Plastic and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and British American
The main advantage of trading using opposite Compagnie Plastic and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Compagnie Plastic vs. Dno ASA | Compagnie Plastic vs. DENSO P ADR | Compagnie Plastic vs. Aptiv PLC | Compagnie Plastic vs. Bridgestone |
| British American vs. TRADELINK ELECTRON | British American vs. Cass Information Systems | British American vs. Stewart Information Services | British American vs. TRADEGATE |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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