Correlation Between Stanley Electric and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both Stanley Electric and Plastic Omnium 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 Stanley Electric and Plastic Omnium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stanley Electric Co and Plastic Omnium, you can compare the effects of market volatilities on Stanley Electric and Plastic Omnium 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 Stanley Electric with a short position of Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Electric and Plastic Omnium.
Diversification Opportunities for Stanley Electric and Plastic Omnium
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stanley and Plastic is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Electric Co and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium and Stanley Electric 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 Stanley Electric Co are associated (or correlated) with Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of Stanley Electric i.e., Stanley Electric and Plastic Omnium go up and down completely randomly.
Pair Corralation between Stanley Electric and Plastic Omnium
Assuming the 90 days trading horizon Stanley Electric Co is expected to generate 0.7 times more return on investment than Plastic Omnium. However, Stanley Electric Co is 1.43 times less risky than Plastic Omnium. It trades about -0.01 of its potential returns per unit of risk. Plastic Omnium is currently generating about -0.02 per unit of risk. If you would invest 1,740 in Stanley Electric Co on September 27, 2024 and sell it today you would lose (210.00) from holding Stanley Electric Co or give up 12.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stanley Electric Co vs. Plastic Omnium
Performance |
| Timeline |
| Stanley Electric |
| Plastic Omnium |
Stanley Electric and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Electric and Plastic Omnium
The main advantage of trading using opposite Stanley Electric and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Electric position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| Stanley Electric vs. Plastic Omnium | Stanley Electric vs. THRACE PLASTICS | Stanley Electric vs. BJs Restaurants | Stanley Electric vs. AUSNUTRIA DAIRY |
| Plastic Omnium vs. Commercial Vehicle Group | Plastic Omnium vs. Zurich Insurance Group | Plastic Omnium vs. Motorcar Parts of | Plastic Omnium vs. Safety Insurance Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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