Correlation Between Plastic Omnium and CRRC

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Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and CRRC 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 CRRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and CRRC Limited, you can compare the effects of market volatilities on Plastic Omnium and CRRC 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 CRRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and CRRC.

Diversification Opportunities for Plastic Omnium and CRRC

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Plastic and CRRC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited 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 CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and CRRC go up and down completely randomly.

Pair Corralation between Plastic Omnium and CRRC

Assuming the 90 days trading horizon Plastic Omnium is expected to generate 1.86 times more return on investment than CRRC. However, Plastic Omnium is 1.86 times more volatile than CRRC Limited. It trades about 0.15 of its potential returns per unit of risk. CRRC Limited is currently generating about -0.01 per unit of risk. If you would invest  843.00  in Plastic Omnium on October 13, 2024 and sell it today you would earn a total of  184.00  from holding Plastic Omnium or generate 21.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.33%
ValuesDaily Returns

Plastic Omnium  vs.  CRRC Limited

 Performance 
       Timeline  
Plastic Omnium 

Risk-Adjusted Performance

11 of 100

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

Risk-Adjusted Performance

0 of 100

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

Plastic Omnium and CRRC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Plastic Omnium and CRRC

The main advantage of trading using opposite Plastic Omnium and CRRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, CRRC 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 CRRC will offset losses from the drop in CRRC's long position.
The idea behind Plastic Omnium and CRRC Limited 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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