Correlation Between Plastic Omnium and ASOS PLC
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and ASOS PLC 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 Plastic Omnium and ASOS PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and ASOS PLC, you can compare the effects of market volatilities on Plastic Omnium and ASOS PLC 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 Plastic Omnium with a short position of ASOS PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and ASOS PLC.
Diversification Opportunities for Plastic Omnium and ASOS PLC
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plastic and ASOS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and ASOS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS PLC and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with ASOS PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS PLC has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and ASOS PLC go up and down completely randomly.
Pair Corralation between Plastic Omnium and ASOS PLC
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the ASOS PLC. But the stock apears to be less risky and, when comparing its historical volatility, Plastic Omnium is 1.2 times less risky than ASOS PLC. The stock trades about -0.06 of its potential returns per unit of risk. The ASOS PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 429.00 in ASOS PLC on September 5, 2024 and sell it today you would earn a total of 13.00 from holding ASOS PLC or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Plastic Omnium vs. ASOS PLC
Performance |
| Timeline |
| Plastic Omnium |
| ASOS PLC |
Plastic Omnium and ASOS PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and ASOS PLC
The main advantage of trading using opposite Plastic Omnium and ASOS PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, ASOS PLC 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 ASOS PLC will offset losses from the drop in ASOS PLC's long position.| Plastic Omnium vs. Clearside Biomedical | Plastic Omnium vs. Darden Restaurants | Plastic Omnium vs. SCANDMEDICAL SOLDK 040 | Plastic Omnium vs. Mitsui Chemicals |
| ASOS PLC vs. Plastic Omnium | ASOS PLC vs. Sumitomo Rubber Industries | ASOS PLC vs. Hyster Yale Materials Handling | ASOS PLC vs. EEDUCATION ALBERT AB |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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