Correlation Between Plastiques and Herige SA
Can any of the company-specific risk be diversified away by investing in both Plastiques and Herige SA 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 Plastiques and Herige SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastiques du Val and Herige SA, you can compare the effects of market volatilities on Plastiques and Herige SA 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 Plastiques with a short position of Herige SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastiques and Herige SA.
Diversification Opportunities for Plastiques and Herige SA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Plastiques and Herige is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Plastiques du Val and Herige SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herige SA and Plastiques 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 Plastiques du Val are associated (or correlated) with Herige SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herige SA has no effect on the direction of Plastiques i.e., Plastiques and Herige SA go up and down completely randomly.
Pair Corralation between Plastiques and Herige SA
Assuming the 90 days trading horizon Plastiques du Val is expected to under-perform the Herige SA. But the stock apears to be less risky and, when comparing its historical volatility, Plastiques du Val is 1.03 times less risky than Herige SA. The stock trades about -0.09 of its potential returns per unit of risk. The Herige SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,540 in Herige SA on September 3, 2024 and sell it today you would earn a total of 120.00 from holding Herige SA or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastiques du Val vs. Herige SA
Performance |
| Timeline |
| Plastiques du Val |
| Herige SA |
Plastiques and Herige SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastiques and Herige SA
The main advantage of trading using opposite Plastiques and Herige SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastiques position performs unexpectedly, Herige SA 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 Herige SA will offset losses from the drop in Herige SA's long position.| Plastiques vs. Groupe Guillin SA | Plastiques vs. Groupe Partouche SA | Plastiques vs. Passat Socit Anonyme | Plastiques vs. Akwel SA |
| Herige SA vs. Jacques Bogart SA | Herige SA vs. Passat Socit Anonyme | Herige SA vs. Stef SA | Herige SA vs. Haulotte Group SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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