Correlation Between Compagnie Plastic and Japan Real

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

Diversification Opportunities for Compagnie Plastic and Japan Real

-0.41

Correlation Coefficient

Compagnie Plastic  Japan Real

Very good diversification

The 3 months correlation between Compagnie and Japan is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Japan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Real Estate 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 Japan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Real Estate has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Japan Real go up and down completely randomly.

Pair Corralation between Compagnie Plastic and Japan Real

Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.88 times more return on investment than Japan Real. However, Compagnie Plastic is 1.88 times more volatile than Japan Real Estate. It trades about 0.16 of its potential returns per unit of risk. Japan Real Estate is currently generating about -0.02 per unit of risk. If you would invest  838.00  in Compagnie Plastic Omnium on December 3, 2024 and sell it today you would earn a total of  211.00  from holding Compagnie Plastic Omnium or generate 25.18% return on investment over 90 days.

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

Compagnie Plastic Omnium  vs.  Japan Real Estate

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 12 (%) 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.

Japan Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Japan Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Compagnie Plastic and Japan Real

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

The idea behind Compagnie Plastic Omnium and Japan Real Estate 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.