Correlation Between Plastic Omnium and SCANDINAVCHEMOTECH

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Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and SCANDINAVCHEMOTECH 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 Plastic Omnium and SCANDINAVCHEMOTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and SCANDINAVCHEMOTECH CLB, you can compare the effects of market volatilities on Plastic Omnium and SCANDINAVCHEMOTECH 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 Plastic Omnium with a short position of SCANDINAVCHEMOTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and SCANDINAVCHEMOTECH.

Diversification Opportunities for Plastic Omnium and SCANDINAVCHEMOTECH

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Plastic and SCANDINAVCHEMOTECH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and SCANDINAVCHEMOTECH CLB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANDINAVCHEMOTECH CLB and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with SCANDINAVCHEMOTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANDINAVCHEMOTECH CLB has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and SCANDINAVCHEMOTECH go up and down completely randomly.

Pair Corralation between Plastic Omnium and SCANDINAVCHEMOTECH

Assuming the 90 days trading horizon Plastic Omnium is expected to generate 3.45 times less return on investment than SCANDINAVCHEMOTECH. But when comparing it to its historical volatility, Plastic Omnium is 6.99 times less risky than SCANDINAVCHEMOTECH. It trades about 0.2 of its potential returns per unit of risk. SCANDINAVCHEMOTECH CLB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10.00  in SCANDINAVCHEMOTECH CLB on April 24, 2025 and sell it today you would earn a total of  3.00  from holding SCANDINAVCHEMOTECH CLB or generate 30.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Plastic Omnium  vs.  SCANDINAVCHEMOTECH CLB

 Performance 
       Timeline  
Plastic Omnium 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Plastic Omnium are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plastic Omnium unveiled solid returns over the last few months and may actually be approaching a breakup point.
SCANDINAVCHEMOTECH CLB 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SCANDINAVCHEMOTECH CLB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SCANDINAVCHEMOTECH reported solid returns over the last few months and may actually be approaching a breakup point.

Plastic Omnium and SCANDINAVCHEMOTECH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Plastic Omnium and SCANDINAVCHEMOTECH

The main advantage of trading using opposite Plastic Omnium and SCANDINAVCHEMOTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, SCANDINAVCHEMOTECH 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 SCANDINAVCHEMOTECH will offset losses from the drop in SCANDINAVCHEMOTECH's long position.
The idea behind Plastic Omnium and SCANDINAVCHEMOTECH CLB 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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