Correlation Between Compagnie Plastic and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Insurance Australia 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 Insurance Australia 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 Insurance Australia Group, you can compare the effects of market volatilities on Compagnie Plastic and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Insurance Australia.
Diversification Opportunities for Compagnie Plastic and Insurance Australia
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and Insurance is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Insurance Australia go up and down completely randomly.
Pair Corralation between Compagnie Plastic and Insurance Australia
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.95 times more return on investment than Insurance Australia. However, Compagnie Plastic is 1.95 times more volatile than Insurance Australia Group. It trades about 0.16 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.21 per unit of risk. If you would invest 1,000.00 in Compagnie Plastic Omnium on October 29, 2024 and sell it today you would earn a total of 68.00 from holding Compagnie Plastic Omnium or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. Insurance Australia Group
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| Insurance Australia |
Compagnie Plastic and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and Insurance Australia
The main advantage of trading using opposite Compagnie Plastic and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| Compagnie Plastic vs. BROADWIND ENRGY | Compagnie Plastic vs. GALENA MINING LTD | Compagnie Plastic vs. Television Broadcasts Limited | Compagnie Plastic vs. TRAINLINE PLC LS |
| Insurance Australia vs. Sunny Optical Technology | Insurance Australia vs. BioNTech SE | Insurance Australia vs. HELIOS TECHS INC | Insurance Australia vs. Easy Software AG |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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