Correlation Between Compagnie Plastic and AJ LUCAS
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and AJ LUCAS 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 AJ LUCAS 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 AJ LUCAS GROUP, you can compare the effects of market volatilities on Compagnie Plastic and AJ LUCAS 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 AJ LUCAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and AJ LUCAS.
Diversification Opportunities for Compagnie Plastic and AJ LUCAS
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compagnie and FW9 is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and AJ LUCAS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ LUCAS GROUP 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 AJ LUCAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ LUCAS GROUP has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and AJ LUCAS go up and down completely randomly.
Pair Corralation between Compagnie Plastic and AJ LUCAS
Assuming the 90 days horizon Compagnie Plastic is expected to generate 6.69 times less return on investment than AJ LUCAS. But when comparing it to its historical volatility, Compagnie Plastic Omnium is 15.72 times less risky than AJ LUCAS. It trades about 0.16 of its potential returns per unit of risk. AJ LUCAS GROUP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.15 in AJ LUCAS GROUP on September 14, 2024 and sell it today you would lose (0.10) from holding AJ LUCAS GROUP or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. AJ LUCAS GROUP
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| AJ LUCAS GROUP |
Compagnie Plastic and AJ LUCAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and AJ LUCAS
The main advantage of trading using opposite Compagnie Plastic and AJ LUCAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, AJ LUCAS 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 AJ LUCAS will offset losses from the drop in AJ LUCAS's long position.| Compagnie Plastic vs. Bridgestone | Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. SIVERS SEMICONDUCTORS AB | Compagnie Plastic vs. Norsk Hydro ASA |
| AJ LUCAS vs. RCM TECHNOLOGIES | AJ LUCAS vs. THORNEY TECHS LTD | AJ LUCAS vs. Corporate Office Properties | AJ LUCAS vs. CAL MAINE FOODS |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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