Correlation Between CHAODA MODERN and Compagnie Plastic

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

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

Diversification Opportunities for CHAODA MODERN and Compagnie Plastic

-0.25

Correlation Coefficient

CHAODA MODERN  Compagnie Plastic

Very good diversification

The 3 months correlation between CHAODA and Compagnie is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CHAODA MODERN AGRI 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 CHAODA MODERN 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 CHAODA MODERN AGRI 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 CHAODA MODERN i.e., CHAODA MODERN and Compagnie Plastic go up and down completely randomly.

Pair Corralation between CHAODA MODERN and Compagnie Plastic

If you would invest  959.00  in Compagnie Plastic Omnium on October 11, 2024 and sell it today you would earn a total of  98.00  from holding Compagnie Plastic Omnium or generate 10.22% return on investment over 90 days.

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

CHAODA MODERN AGRI  vs.  Compagnie Plastic Omnium

CHAODA MODERN AGRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAODA MODERN AGRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Compagnie Plastic Omnium

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 13 (%) 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 CHAODA MODERN and Compagnie Plastic

The main advantage of trading using opposite CHAODA MODERN and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAODA MODERN 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 CHAODA MODERN AGRI 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.