Correlation Between Plastic Omnium and CI GAMES

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

By analyzing existing cross correlation between Plastic Omnium and CI GAMES SA, you can compare the effects of market volatilities on Plastic Omnium and CI GAMES 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 CI GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and CI GAMES.

Diversification Opportunities for Plastic Omnium and CI GAMES

0.26

Correlation Coefficient

Plastic Omnium  CI GAMES

Modest diversification

The 3 months correlation between Plastic and CI7 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and CI GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI GAMES SA 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 CI GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI GAMES SA has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and CI GAMES go up and down completely randomly.

Pair Corralation between Plastic Omnium and CI GAMES

Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the CI GAMES. In addition to that, Plastic Omnium is 1.15 times more volatile than CI GAMES SA. It trades about -0.02 of its total potential returns per unit of risk. CI GAMES SA is currently generating about 0.22 per unit of volatility. If you would invest  26.00  in CI GAMES SA on December 29, 2024 and sell it today you would earn a total of  11.00  from holding CI GAMES SA or generate 42.31% return on investment over 90 days.

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

Plastic Omnium  vs.  CI GAMES SA

Plastic Omnium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plastic Omnium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Plastic Omnium is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CI GAMES SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI GAMES SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CI GAMES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plastic Omnium and CI GAMES

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

The idea behind Plastic Omnium and CI GAMES SA 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.