Correlation Between PPG Industries and Carbios SAS
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Carbios SAS 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 PPG Industries and Carbios SAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Carbios SAS, you can compare the effects of market volatilities on PPG Industries and Carbios SAS 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 PPG Industries with a short position of Carbios SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Carbios SAS.
Diversification Opportunities for PPG Industries and Carbios SAS
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PPG and Carbios is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Carbios SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios SAS and PPG Industries 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 PPG Industries are associated (or correlated) with Carbios SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios SAS has no effect on the direction of PPG Industries i.e., PPG Industries and Carbios SAS go up and down completely randomly.
Pair Corralation between PPG Industries and Carbios SAS
Considering the 90-day investment horizon PPG Industries is expected to generate 0.33 times more return on investment than Carbios SAS. However, PPG Industries is 3.01 times less risky than Carbios SAS. It trades about 0.01 of its potential returns per unit of risk. Carbios SAS is currently generating about -0.05 per unit of risk. If you would invest 12,153 in PPG Industries on September 16, 2024 and sell it today you would earn a total of 264.00 from holding PPG Industries or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. Carbios SAS
Performance |
| Timeline |
| PPG Industries |
| Carbios SAS |
PPG Industries and Carbios SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Carbios SAS
The main advantage of trading using opposite PPG Industries and Carbios SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Carbios SAS 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 Carbios SAS will offset losses from the drop in Carbios SAS's long position.| PPG Industries vs. LyondellBasell Industries NV | PPG Industries vs. Cabot | PPG Industries vs. Westlake Chemical | PPG Industries vs. Air Products and |
| Carbios SAS vs. Chemours Co | Carbios SAS vs. International Flavors Fragrances | Carbios SAS vs. Air Products and | Carbios SAS vs. PPG Industries |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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