Correlation Between Compagnie Plastic and Systemair

Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Systemair 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 Plastic and Systemair into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compagnie Plastic Omnium and Systemair AB, you can compare the effects of market volatilities on Compagnie Plastic and Systemair 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 Plastic with a short position of Systemair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Systemair.

Diversification Opportunities for Compagnie Plastic and Systemair

-0.33

Correlation Coefficient

Compagnie Plastic  Systemair

Very good diversification

The 3 months correlation between Compagnie and Systemair is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and Compagnie Plastic 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 Plastic Omnium are associated (or correlated) with Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Systemair go up and down completely randomly.

Pair Corralation between Compagnie Plastic and Systemair

Assuming the 90 days trading horizon Compagnie Plastic is expected to generate 4.91 times less return on investment than Systemair. In addition to that, Compagnie Plastic is 1.93 times more volatile than Systemair AB. It trades about 0.02 of its total potential returns per unit of risk. Systemair AB is currently generating about 0.15 per unit of volatility. If you would invest  7,960  in Systemair AB on September 2, 2024 and sell it today you would earn a total of  1,250  from holding Systemair AB or generate 15.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Compagnie Plastic Omnium  vs.  Systemair AB

Compagnie Plastic Omnium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Compagnie Plastic is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Systemair AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Systemair unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie Plastic and Systemair

The main advantage of trading using opposite Compagnie Plastic and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Systemair 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 Systemair will offset losses from the drop in Systemair's long position.

The idea behind Compagnie Plastic Omnium and Systemair AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..