Correlation Between Compagnie Plastic and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on Compagnie Plastic and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Sterling Construction.
Diversification Opportunities for Compagnie Plastic and Sterling Construction
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compagnie and Sterling is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Sterling Construction go up and down completely randomly.
Pair Corralation between Compagnie Plastic and Sterling Construction
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 0.5 times more return on investment than Sterling Construction. However, Compagnie Plastic Omnium is 1.99 times less risky than Sterling Construction. It trades about 0.15 of its potential returns per unit of risk. Sterling Construction is currently generating about -0.02 per unit of risk. If you would invest 893.00 in Compagnie Plastic Omnium on November 6, 2024 and sell it today you would earn a total of 198.00 from holding Compagnie Plastic Omnium or generate 22.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. Sterling Construction
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| Sterling Construction |
Compagnie Plastic and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and Sterling Construction
The main advantage of trading using opposite Compagnie Plastic and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| Compagnie Plastic vs. GEAR4MUSIC LS 10 | Compagnie Plastic vs. CSSC Offshore Marine | Compagnie Plastic vs. PLAYMATES TOYS | Compagnie Plastic vs. TROPHY GAMES DEV |
| Sterling Construction vs. EMBARK EDUCATION LTD | Sterling Construction vs. Transport International Holdings | Sterling Construction vs. JD SPORTS FASH | Sterling Construction vs. Perdoceo Education |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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