Correlation Between BORR DRILLING and Compagnie Plastic

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

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

Diversification Opportunities for BORR DRILLING and Compagnie Plastic

-0.33

Correlation Coefficient

BORR DRILLING  Compagnie Plastic

Very good diversification

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

Pair Corralation between BORR DRILLING and Compagnie Plastic

Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the Compagnie Plastic. In addition to that, BORR DRILLING is 1.66 times more volatile than Compagnie Plastic Omnium. It trades about -0.07 of its total potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about 0.12 per unit of volatility. If you would invest  903.00  in Compagnie Plastic Omnium on October 23, 2024 and sell it today you would earn a total of  164.00  from holding Compagnie Plastic Omnium or generate 18.16% return on investment over 90 days.

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

BORR DRILLING NEW  vs.  Compagnie Plastic Omnium

BORR DRILLING NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BORR DRILLING NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Compagnie Plastic Omnium

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Compagnie Plastic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BORR DRILLING and Compagnie Plastic

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

The idea behind BORR DRILLING NEW and Compagnie Plastic Omnium 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.