Correlation Between Phillips and Compagnie Plastic

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

By analyzing existing cross correlation between Phillips 66 and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Phillips 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 Phillips with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Compagnie Plastic.

Diversification Opportunities for Phillips and Compagnie Plastic

-0.59

Correlation Coefficient

Phillips  Compagnie Plastic

Excellent diversification

The 3 months correlation between Phillips and Compagnie is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 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 Phillips 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 Phillips 66 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 Phillips i.e., Phillips and Compagnie Plastic go up and down completely randomly.

Pair Corralation between Phillips and Compagnie Plastic

Assuming the 90 days horizon Phillips 66 is expected to under-perform the Compagnie Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Phillips 66 is 1.22 times less risky than Compagnie Plastic. The stock trades about -0.1 of its potential returns per unit of risk. The Compagnie Plastic Omnium is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  899.00  in Compagnie Plastic Omnium on September 27, 2024 and sell it today you would earn a total of  71.00  from holding Compagnie Plastic Omnium or generate 7.9% return on investment over 90 days.

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

Phillips 66  vs.  Compagnie Plastic Omnium

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Compagnie Plastic Omnium

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Compagnie Plastic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phillips and Compagnie Plastic

The main advantage of trading using opposite Phillips and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips 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 Phillips 66 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.