Correlation Between Compagnie Plastic and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and JAPAN TOBACCO 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 JAPAN TOBACCO 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 JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Compagnie Plastic and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and JAPAN TOBACCO.
Diversification Opportunities for Compagnie Plastic and JAPAN TOBACCO
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compagnie and JAPAN is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between Compagnie Plastic and JAPAN TOBACCO
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.69 times more return on investment than JAPAN TOBACCO. However, Compagnie Plastic is 1.69 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.15 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about -0.02 per unit of risk. If you would invest 887.00 in Compagnie Plastic Omnium on November 2, 2024 and sell it today you would earn a total of 191.00 from holding Compagnie Plastic Omnium or generate 21.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| JAPAN TOBACCO UNSPADR12 |
Compagnie Plastic and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and JAPAN TOBACCO
The main advantage of trading using opposite Compagnie Plastic and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| Compagnie Plastic vs. Stag Industrial | Compagnie Plastic vs. Calibre Mining Corp | Compagnie Plastic vs. Zijin Mining Group | Compagnie Plastic vs. Siemens Healthineers AG |
| JAPAN TOBACCO vs. Materialise NV | JAPAN TOBACCO vs. Mitsui Chemicals | JAPAN TOBACCO vs. SANOK RUBBER ZY | JAPAN TOBACCO vs. Mitsubishi Gas Chemical |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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