Correlation Between Compagnie Plastic and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on Compagnie Plastic and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and VULCAN MATERIALS.
Diversification Opportunities for Compagnie Plastic and VULCAN MATERIALS
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and VULCAN is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between Compagnie Plastic and VULCAN MATERIALS
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to under-perform the VULCAN MATERIALS. In addition to that, Compagnie Plastic is 1.49 times more volatile than VULCAN MATERIALS. It trades about -0.03 of its total potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.06 per unit of volatility. If you would invest 16,892 in VULCAN MATERIALS on August 25, 2024 and sell it today you would earn a total of 9,708 from holding VULCAN MATERIALS or generate 57.47% 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. VULCAN MATERIALS
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| VULCAN MATERIALS |
Compagnie Plastic and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and VULCAN MATERIALS
The main advantage of trading using opposite Compagnie Plastic and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| Compagnie Plastic vs. PT Astra International | Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. NMI Holdings | Compagnie Plastic vs. Origin Agritech |
| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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