Correlation Between Compagnie Plastic and Arch Capital

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Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Arch Capital 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 Arch Capital 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 Arch Capital Group, you can compare the effects of market volatilities on Compagnie Plastic and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Arch Capital.

Diversification Opportunities for Compagnie Plastic and Arch Capital

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Compagnie and Arch is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Arch Capital go up and down completely randomly.

Pair Corralation between Compagnie Plastic and Arch Capital

Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.46 times more return on investment than Arch Capital. However, Compagnie Plastic is 1.46 times more volatile than Arch Capital Group. It trades about 0.12 of its potential returns per unit of risk. Arch Capital Group is currently generating about -0.02 per unit of risk. If you would invest  899.00  in Compagnie Plastic Omnium on September 12, 2024 and sell it today you would earn a total of  60.00  from holding Compagnie Plastic Omnium or generate 6.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Compagnie Plastic Omnium  vs.  Arch Capital Group

 Performance 
       Timeline  
Compagnie Plastic Omnium 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Compagnie Plastic reported solid returns over the last few months and may actually be approaching a breakup point.
Arch Capital Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Arch Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Arch Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Compagnie Plastic and Arch Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Compagnie Plastic and Arch Capital

The main advantage of trading using opposite Compagnie Plastic and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.
The idea behind Compagnie Plastic Omnium and Arch Capital Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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