Correlation Between Compagnie Plastic and Phillips

Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Phillips 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 Phillips 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 Phillips 66, you can compare the effects of market volatilities on Compagnie Plastic and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Phillips.

Diversification Opportunities for Compagnie Plastic and Phillips

-0.75

Correlation Coefficient

Compagnie Plastic  Phillips

Pay attention - limited upside

The 3 months correlation between Compagnie and Phillips is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Phillips go up and down completely randomly.

Pair Corralation between Compagnie Plastic and Phillips

Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.3 times more return on investment than Phillips. However, Compagnie Plastic is 1.3 times more volatile than Phillips 66. It trades about 0.15 of its potential returns per unit of risk. Phillips 66 is currently generating about -0.06 per unit of risk. If you would invest  840.00  in Compagnie Plastic Omnium on October 15, 2024 and sell it today you would earn a total of  184.00  from holding Compagnie Plastic Omnium or generate 21.9% return on investment over 90 days.

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

Compagnie Plastic Omnium  vs.  Phillips 66

Compagnie Plastic Omnium

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 11 (%) 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.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Compagnie Plastic and Phillips

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

The idea behind Compagnie Plastic Omnium and Phillips 66 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.