Correlation Between Plastic Omnium and Hexcel
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and Hexcel 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 Hexcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Hexcel, you can compare the effects of market volatilities on Plastic Omnium and Hexcel 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 Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Hexcel.
Diversification Opportunities for Plastic Omnium and Hexcel
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Plastic and Hexcel is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and Hexcel go up and down completely randomly.
Pair Corralation between Plastic Omnium and Hexcel
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the Hexcel. In addition to that, Plastic Omnium is 1.37 times more volatile than Hexcel. It trades about -0.02 of its total potential returns per unit of risk. Hexcel is currently generating about 0.02 per unit of volatility. If you would invest 5,402 in Hexcel on September 2, 2024 and sell it today you would earn a total of 548.00 from holding Hexcel or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. Hexcel
Performance |
| Timeline |
| Plastic Omnium |
| Hexcel |
Plastic Omnium and Hexcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and Hexcel
The main advantage of trading using opposite Plastic Omnium and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
| Hexcel vs. REINET INVESTMENTS SCA | Hexcel vs. AVITA Medical | Hexcel vs. SCANDMEDICAL SOLDK 040 | Hexcel vs. Virtus Investment Partners |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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