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

0.13

Correlation Coefficient

Compagnie Plastic  Japan Real

Average diversification

The 3 months correlation between Compagnie and Japan is 0.13. 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 under-perform the Japan Real. In addition to that, Compagnie Plastic is 1.87 times more volatile than Japan Real Estate. It trades about -0.01 of its total potential returns per unit of risk. Japan Real Estate is currently generating about 0.09 per unit of volatility. If you would invest  62,590  in Japan Real Estate on December 29, 2024 and sell it today you would earn a total of  4,401  from holding Japan Real Estate or generate 7.03% return on investment over 90 days.

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

Compagnie Plastic Omnium  vs.  Japan Real Estate

Compagnie Plastic Omnium

Risk-Adjusted Performance

Very Weak

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

Japan Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Japan Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.