Correlation Between Learning Technologies and Compagnie Plastic

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

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

Diversification Opportunities for Learning Technologies and Compagnie Plastic

0.55

Correlation Coefficient

Learning Technologies  Compagnie Plastic

Very weak diversification

The 3 months correlation between Learning and Compagnie is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Learning Technologies Group and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium and Learning Technologies 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 Learning Technologies Group are associated (or correlated) with Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Learning Technologies i.e., Learning Technologies and Compagnie Plastic go up and down completely randomly.

Pair Corralation between Learning Technologies and Compagnie Plastic

Assuming the 90 days trading horizon Learning Technologies Group is expected to generate 1.19 times more return on investment than Compagnie Plastic. However, Learning Technologies is 1.19 times more volatile than Compagnie Plastic Omnium. It trades about 0.0 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.01 per unit of risk. If you would invest  11,475  in Learning Technologies Group on October 10, 2024 and sell it today you would lose (1,715) from holding Learning Technologies Group or give up 14.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Learning Technologies Group  vs.  Compagnie Plastic Omnium

Learning Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Learning Technologies Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Learning Technologies is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Compagnie Plastic Omnium

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Learning Technologies and Compagnie Plastic

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

The idea behind Learning Technologies Group and Compagnie Plastic Omnium 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 Stocks Directory module to find actively traded stocks across global markets.