Correlation Between Plastic Omnium and PC Connection
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and PC Connection 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 PC Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and PC Connection, you can compare the effects of market volatilities on Plastic Omnium and PC Connection 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 PC Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and PC Connection.
Diversification Opportunities for Plastic Omnium and PC Connection
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Plastic and PCC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and PC Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Connection 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 PC Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Connection has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and PC Connection go up and down completely randomly.
Pair Corralation between Plastic Omnium and PC Connection
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 1.91 times more return on investment than PC Connection. However, Plastic Omnium is 1.91 times more volatile than PC Connection. It trades about 0.2 of its potential returns per unit of risk. PC Connection is currently generating about 0.05 per unit of risk. If you would invest 897.00 in Plastic Omnium on September 15, 2024 and sell it today you would earn a total of 114.00 from holding Plastic Omnium or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. PC Connection
Performance |
| Timeline |
| Plastic Omnium |
| PC Connection |
Plastic Omnium and PC Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and PC Connection
The main advantage of trading using opposite Plastic Omnium and PC Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, PC Connection 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 PC Connection will offset losses from the drop in PC Connection's long position.| Plastic Omnium vs. Austevoll Seafood ASA | Plastic Omnium vs. Sterling Construction | Plastic Omnium vs. Granite Construction | Plastic Omnium vs. TITAN MACHINERY |
| PC Connection vs. Australian Agricultural | PC Connection vs. THRACE PLASTICS | PC Connection vs. Plastic Omnium | PC Connection vs. Granite Construction |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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