Correlation Between Autoliv and Compagnie Générale
Can any of the company-specific risk be diversified away by investing in both Autoliv and Compagnie Générale 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 Autoliv and Compagnie Générale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Compagnie Gnrale des, you can compare the effects of market volatilities on Autoliv and Compagnie Générale 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 Autoliv with a short position of Compagnie Générale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Compagnie Générale.
Diversification Opportunities for Autoliv and Compagnie Générale
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Autoliv and Compagnie is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Compagnie Gnrale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Gnrale des and Autoliv 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 Autoliv are associated (or correlated) with Compagnie Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Gnrale des has no effect on the direction of Autoliv i.e., Autoliv and Compagnie Générale go up and down completely randomly.
Pair Corralation between Autoliv and Compagnie Générale
Considering the 90-day investment horizon Autoliv is expected to under-perform the Compagnie Générale. But the stock apears to be less risky and, when comparing its historical volatility, Autoliv is 1.48 times less risky than Compagnie Générale. The stock trades about -0.06 of its potential returns per unit of risk. The Compagnie Gnrale des is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,570 in Compagnie Gnrale des on November 28, 2024 and sell it today you would earn a total of 115.00 from holding Compagnie Gnrale des or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. Compagnie Gnrale des
Performance |
| Timeline |
| Autoliv |
| Compagnie Gnrale des |
Autoliv and Compagnie Générale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and Compagnie Générale
The main advantage of trading using opposite Autoliv and Compagnie Générale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, Compagnie Générale 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 Générale will offset losses from the drop in Compagnie Générale's long position.The idea behind Autoliv and Compagnie Gnrale des 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.| Compagnie Générale vs. Continental AG PK | Compagnie Générale vs. Bridgestone Corp ADR | Compagnie Générale vs. Continental Aktiengesellschaft | Compagnie Générale vs. Douglas Dynamics |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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