Correlation Between Tradegate and Compagnie Plastic

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

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

Diversification Opportunities for Tradegate and Compagnie Plastic

-0.21

Correlation Coefficient

Tradegate  Compagnie Plastic

Very good diversification

The 3 months correlation between Tradegate and Compagnie is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels 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 Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Tradegate i.e., Tradegate and Compagnie Plastic go up and down completely randomly.

Pair Corralation between Tradegate and Compagnie Plastic

Assuming the 90 days horizon Tradegate is expected to generate 25.38 times less return on investment than Compagnie Plastic. But when comparing it to its historical volatility, Tradegate AG Wertpapierhandelsbank is 2.74 times less risky than Compagnie Plastic. It trades about 0.0 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  926.00  in Compagnie Plastic Omnium on September 29, 2024 and sell it today you would earn a total of  44.00  from holding Compagnie Plastic Omnium or generate 4.75% return on investment over 90 days.

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

Tradegate AG Wertpapierhandels  vs.  Compagnie Plastic Omnium

Tradegate AG Wertpap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tradegate AG Wertpapierhandelsbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tradegate is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Compagnie Plastic Omnium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Compagnie Plastic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tradegate and Compagnie Plastic

The main advantage of trading using opposite Tradegate and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.