Correlation Between Compagnie Plastic and Tempur Sealy

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

Diversification Opportunities for Compagnie Plastic and Tempur Sealy

0.44

Correlation Coefficient

Compagnie Plastic  Tempur Sealy

Very weak diversification

The 3 months correlation between Compagnie and Tempur is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Tempur Sealy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempur Sealy Interna 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 Tempur Sealy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempur Sealy Interna has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Tempur Sealy go up and down completely randomly.

Pair Corralation between Compagnie Plastic and Tempur Sealy

Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.08 times more return on investment than Tempur Sealy. However, Compagnie Plastic is 1.08 times more volatile than Tempur Sealy International. It trades about 0.05 of its potential returns per unit of risk. Tempur Sealy International is currently generating about -0.01 per unit of risk. If you would invest  970.00  in Compagnie Plastic Omnium on December 21, 2024 and sell it today you would earn a total of  55.00  from holding Compagnie Plastic Omnium or generate 5.67% return on investment over 90 days.

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

Compagnie Plastic Omnium  vs.  Tempur Sealy International

Compagnie Plastic Omnium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Compagnie Plastic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tempur Sealy Interna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tempur Sealy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tempur Sealy 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 Tempur Sealy

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

The idea behind Compagnie Plastic Omnium and Tempur Sealy International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.