Correlation Between Parx Plastics and Trigano SA

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

By analyzing existing cross correlation between Parx Plastics NV and Trigano SA, you can compare the effects of market volatilities on Parx Plastics and Trigano SA 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 Parx Plastics with a short position of Trigano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parx Plastics and Trigano SA.

Diversification Opportunities for Parx Plastics and Trigano SA

0.76

Correlation Coefficient

Parx Plastics  Trigano SA

Poor diversification

The 3 months correlation between Parx and Trigano is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Parx Plastics NV and Trigano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trigano SA and Parx Plastics 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 Parx Plastics NV are associated (or correlated) with Trigano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trigano SA has no effect on the direction of Parx Plastics i.e., Parx Plastics and Trigano SA go up and down completely randomly.

Pair Corralation between Parx Plastics and Trigano SA

Assuming the 90 days trading horizon Parx Plastics NV is expected to generate 4.47 times more return on investment than Trigano SA. However, Parx Plastics is 4.47 times more volatile than Trigano SA. It trades about 0.08 of its potential returns per unit of risk. Trigano SA is currently generating about 0.05 per unit of risk. If you would invest  19.00  in Parx Plastics NV on September 29, 2024 and sell it today you would earn a total of  11.00  from holding Parx Plastics NV or generate 57.89% return on investment over 90 days.

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

Parx Plastics NV  vs.  Trigano SA

Parx Plastics NV

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Parx Plastics NV are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Parx Plastics reported solid returns over the last few months and may actually be approaching a breakup point.

Trigano SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trigano SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Trigano SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Parx Plastics and Trigano SA

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

The idea behind Parx Plastics NV and Trigano 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.