Correlation Between Compagnie Plastic and UNICREDIT SPA

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

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

Diversification Opportunities for Compagnie Plastic and UNICREDIT SPA

0.91

Correlation Coefficient

Compagnie Plastic  UNICREDIT SPA

Almost no diversification

The 3 months correlation between Compagnie and UNICREDIT is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and UNICREDIT SPA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNICREDIT SPA ADR and Compagnie Plastic 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 Compagnie Plastic Omnium are associated (or correlated) with UNICREDIT SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNICREDIT SPA ADR has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and UNICREDIT SPA go up and down completely randomly.

Pair Corralation between Compagnie Plastic and UNICREDIT SPA

Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.37 times more return on investment than UNICREDIT SPA. However, Compagnie Plastic is 1.37 times more volatile than UNICREDIT SPA ADR. It trades about 0.27 of its potential returns per unit of risk. UNICREDIT SPA ADR is currently generating about 0.18 per unit of risk. If you would invest  851.00  in Compagnie Plastic Omnium on April 23, 2025 and sell it today you would earn a total of  359.00  from holding Compagnie Plastic Omnium or generate 42.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Compagnie Plastic Omnium  vs.  UNICREDIT SPA ADR

Compagnie Plastic Omnium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 21 (%) 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.

UNICREDIT SPA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNICREDIT SPA ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, UNICREDIT SPA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie Plastic and UNICREDIT SPA

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

The idea behind Compagnie Plastic Omnium and UNICREDIT SPA ADR 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.