Correlation Between Plastic Omnium and Apple

Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and Apple 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 Plastic Omnium and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Plastic Omnium and Apple Inc, you can compare the effects of market volatilities on Plastic Omnium and Apple 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 Plastic Omnium with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Apple.

Diversification Opportunities for Plastic Omnium and Apple

0.65

Correlation Coefficient

Plastic Omnium  Apple

Poor diversification

The 3 months correlation between Plastic and Apple is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and Apple go up and down completely randomly.

Pair Corralation between Plastic Omnium and Apple

Assuming the 90 days trading horizon Plastic Omnium is expected to generate 2.93 times more return on investment than Apple. However, Plastic Omnium is 2.93 times more volatile than Apple Inc. It trades about 0.13 of its potential returns per unit of risk. Apple Inc is currently generating about 0.33 per unit of risk. If you would invest  921.00  in Plastic Omnium on October 11, 2024 and sell it today you would earn a total of  117.00  from holding Plastic Omnium or generate 12.7% return on investment over 90 days.

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

Plastic Omnium  vs.  Apple Inc

Plastic Omnium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plastic Omnium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plastic Omnium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plastic Omnium and Apple

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

The idea behind Plastic Omnium and Apple Inc 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.