Correlation Between Continental Aktiengesellscha and 2G ENERGY
Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha and 2G ENERGY 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 Continental Aktiengesellscha and 2G ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Aktiengesellschaft and 2G ENERGY , you can compare the effects of market volatilities on Continental Aktiengesellscha and 2G ENERGY 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 Continental Aktiengesellscha with a short position of 2G ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and 2G ENERGY.
Diversification Opportunities for Continental Aktiengesellscha and 2G ENERGY
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Continental and 2GB is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and 2G ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2G ENERGY and Continental Aktiengesellscha 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 Continental Aktiengesellschaft are associated (or correlated) with 2G ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2G ENERGY has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and 2G ENERGY go up and down completely randomly.
Pair Corralation between Continental Aktiengesellscha and 2G ENERGY
Assuming the 90 days horizon Continental Aktiengesellschaft is expected to generate 1.1 times more return on investment than 2G ENERGY. However, Continental Aktiengesellscha is 1.1 times more volatile than 2G ENERGY . It trades about 0.01 of its potential returns per unit of risk. 2G ENERGY is currently generating about -0.04 per unit of risk. If you would invest 6,328 in Continental Aktiengesellschaft on September 1, 2024 and sell it today you would lose (144.00) from holding Continental Aktiengesellschaft or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Aktiengesellschaft vs. 2G ENERGY
Performance |
| Timeline |
| Continental Aktiengesellscha |
| 2G ENERGY |
Continental Aktiengesellscha and 2G ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Aktiengesellscha and 2G ENERGY
The main advantage of trading using opposite Continental Aktiengesellscha and 2G ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha position performs unexpectedly, 2G ENERGY 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 2G ENERGY will offset losses from the drop in 2G ENERGY's long position.The idea behind Continental Aktiengesellschaft and 2G ENERGY 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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