Correlation Between Plastic Omnium and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and Highlight Communications 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 Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Highlight Communications AG, you can compare the effects of market volatilities on Plastic Omnium and Highlight Communications 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 Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Highlight Communications.
Diversification Opportunities for Plastic Omnium and Highlight Communications
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plastic and Highlight is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications 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 Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and Highlight Communications go up and down completely randomly.
Pair Corralation between Plastic Omnium and Highlight Communications
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 0.7 times more return on investment than Highlight Communications. However, Plastic Omnium is 1.43 times less risky than Highlight Communications. It trades about 0.02 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.08 per unit of risk. If you would invest 855.00 in Plastic Omnium on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Plastic Omnium or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. Highlight Communications AG
Performance |
| Timeline |
| Plastic Omnium |
| Highlight Communications |
Plastic Omnium and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and Highlight Communications
The main advantage of trading using opposite Plastic Omnium and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
| Highlight Communications vs. Netflix | Highlight Communications vs. Warner Music Group | Highlight Communications vs. Superior Plus Corp | Highlight Communications vs. NMI Holdings |
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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