Correlation Between Compagnie Plastic and Vale SA
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Vale SA 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 Vale SA 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 Vale SA, you can compare the effects of market volatilities on Compagnie Plastic and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Vale SA.
Diversification Opportunities for Compagnie Plastic and Vale SA
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and Vale is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Vale SA go up and down completely randomly.
Pair Corralation between Compagnie Plastic and Vale SA
Assuming the 90 days horizon Compagnie Plastic is expected to generate 2.06 times less return on investment than Vale SA. In addition to that, Compagnie Plastic is 1.41 times more volatile than Vale SA. It trades about 0.03 of its total potential returns per unit of risk. Vale SA is currently generating about 0.09 per unit of volatility. If you would invest 940.00 in Vale SA on July 20, 2025 and sell it today you would earn a total of 25.00 from holding Vale SA or generate 2.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. Vale SA
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| Vale SA |
Compagnie Plastic and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and Vale SA
The main advantage of trading using opposite Compagnie Plastic and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| Compagnie Plastic vs. Martin Marietta Materials | Compagnie Plastic vs. Mitsubishi Materials | Compagnie Plastic vs. Host Hotels Resorts | Compagnie Plastic vs. COVIVIO HOTELS INH |
| Vale SA vs. Infrastrutture Wireless Italiane | Vale SA vs. Highlight Communications AG | Vale SA vs. CITIC Telecom International | Vale SA vs. CITY OFFICE REIT |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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