Correlation Between SCOTT TECHNOLOGY and Compagnie Plastic

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

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

Diversification Opportunities for SCOTT TECHNOLOGY and Compagnie Plastic

0.03

Correlation Coefficient

SCOTT TECHNOLOGY  Compagnie Plastic

Significant diversification

The 3 months correlation between SCOTT and Compagnie is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Compagnie Plastic go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Compagnie Plastic

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to under-perform the Compagnie Plastic. In addition to that, SCOTT TECHNOLOGY is 1.04 times more volatile than Compagnie Plastic Omnium. It trades about 0.0 of its total potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about 0.13 per unit of volatility. If you would invest  893.00  in Compagnie Plastic Omnium on October 7, 2024 and sell it today you would earn a total of  104.00  from holding Compagnie Plastic Omnium or generate 11.65% return on investment over 90 days.

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

SCOTT TECHNOLOGY  vs.  Compagnie Plastic Omnium

SCOTT TECHNOLOGY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, SCOTT TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 SCOTT TECHNOLOGY and Compagnie Plastic

The main advantage of trading using opposite SCOTT TECHNOLOGY and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.