Correlation Between Compagnie Plastic and GOODYEAR T
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and GOODYEAR T 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 GOODYEAR T 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 GOODYEAR T RUBBER, you can compare the effects of market volatilities on Compagnie Plastic and GOODYEAR T 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 GOODYEAR T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and GOODYEAR T.
Diversification Opportunities for Compagnie Plastic and GOODYEAR T
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Compagnie and GOODYEAR is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER 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 GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and GOODYEAR T go up and down completely randomly.
Pair Corralation between Compagnie Plastic and GOODYEAR T
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to under-perform the GOODYEAR T. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie Plastic Omnium is 1.44 times less risky than GOODYEAR T. The stock trades about -0.19 of its potential returns per unit of risk. The GOODYEAR T RUBBER is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 753.00 in GOODYEAR T RUBBER on August 31, 2024 and sell it today you would earn a total of 245.00 from holding GOODYEAR T RUBBER or generate 32.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. GOODYEAR T RUBBER
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| GOODYEAR T RUBBER |
Compagnie Plastic and GOODYEAR T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and GOODYEAR T
The main advantage of trading using opposite Compagnie Plastic and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.| Compagnie Plastic vs. PT Astra International | Compagnie Plastic vs. Magna International | Compagnie Plastic vs. Fuyao Glass Industry | Compagnie Plastic vs. Superior Plus Corp |
| GOODYEAR T vs. CODERE ONLINE LUX | GOODYEAR T vs. PACIFIC ONLINE | GOODYEAR T vs. Live Nation Entertainment | GOODYEAR T vs. Carsales |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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