Correlation Between MTRLimited and Compagnie Plastic

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

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

Diversification Opportunities for MTRLimited and Compagnie Plastic

0.32

Correlation Coefficient

MTRLimited  Compagnie Plastic

Weak diversification

The 3 months correlation between MTRLimited and Compagnie is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MTR Limited 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 MTRLimited 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 MTR Limited 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 MTRLimited i.e., MTRLimited and Compagnie Plastic go up and down completely randomly.

Pair Corralation between MTRLimited and Compagnie Plastic

Assuming the 90 days horizon MTR Limited is expected to generate 1.07 times more return on investment than Compagnie Plastic. However, MTRLimited is 1.07 times more volatile than Compagnie Plastic Omnium. It trades about 0.05 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.02 per unit of risk. If you would invest  215.00  in MTR Limited on September 4, 2024 and sell it today you would earn a total of  115.00  from holding MTR Limited or generate 53.49% return on investment over 90 days.

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

MTR Limited  vs.  Compagnie Plastic Omnium

MTR Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MTR Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MTRLimited may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Compagnie Plastic Omnium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Compagnie Plastic is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MTRLimited and Compagnie Plastic

The main advantage of trading using opposite MTRLimited and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTRLimited 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 MTR Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.