Correlation Between Compagnie Plastic and ViacomCBS

Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and ViacomCBS 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 ViacomCBS 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 ViacomCBS, you can compare the effects of market volatilities on Compagnie Plastic and ViacomCBS 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 ViacomCBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and ViacomCBS.

Diversification Opportunities for Compagnie Plastic and ViacomCBS

0.24

Correlation Coefficient

Compagnie Plastic  ViacomCBS

Modest diversification

The 3 months correlation between Compagnie and ViacomCBS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and ViacomCBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ViacomCBS 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 ViacomCBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ViacomCBS has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and ViacomCBS go up and down completely randomly.

Pair Corralation between Compagnie Plastic and ViacomCBS

Assuming the 90 days horizon Compagnie Plastic is expected to generate 15.29 times less return on investment than ViacomCBS. In addition to that, Compagnie Plastic is 1.29 times more volatile than ViacomCBS. It trades about 0.01 of its total potential returns per unit of risk. ViacomCBS is currently generating about 0.2 per unit of volatility. If you would invest  1,024  in ViacomCBS on November 28, 2024 and sell it today you would earn a total of  89.00  from holding ViacomCBS or generate 8.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Compagnie Plastic Omnium  vs.  ViacomCBS

Compagnie Plastic Omnium

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Compagnie Plastic reported solid returns over the last few months and may actually be approaching a breakup point.

ViacomCBS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ViacomCBS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ViacomCBS may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Compagnie Plastic and ViacomCBS

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

The idea behind Compagnie Plastic Omnium and ViacomCBS 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.