Correlation Between Compagnie and Plastiques
Can any of the company-specific risk be diversified away by investing in both Compagnie and Plastiques 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 Compagnie and Plastiques into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and Plastiques du Val, you can compare the effects of market volatilities on Compagnie and Plastiques 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 Compagnie with a short position of Plastiques. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Plastiques.
Diversification Opportunities for Compagnie and Plastiques
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compagnie and Plastiques is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Plastiques du Val in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastiques du Val and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Plastiques. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastiques du Val has no effect on the direction of Compagnie i.e., Compagnie and Plastiques go up and down completely randomly.
Pair Corralation between Compagnie and Plastiques
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.57 times more return on investment than Plastiques. However, Compagnie de Saint Gobain is 1.75 times less risky than Plastiques. It trades about 0.12 of its potential returns per unit of risk. Plastiques du Val is currently generating about -0.08 per unit of risk. If you would invest 5,268 in Compagnie de Saint Gobain on August 29, 2024 and sell it today you would earn a total of 3,250 from holding Compagnie de Saint Gobain or generate 61.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. Plastiques du Val
Performance |
| Timeline |
| Compagnie de Saint |
| Plastiques du Val |
Compagnie and Plastiques Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Plastiques
The main advantage of trading using opposite Compagnie and Plastiques positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Plastiques 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 Plastiques will offset losses from the drop in Plastiques' long position.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
| Plastiques vs. Groupe Guillin SA | Plastiques vs. Groupe Partouche SA | Plastiques vs. Passat Socit Anonyme | Plastiques vs. Akwel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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