Correlation Between Continental Aktiengesellscha and DENSO P
Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha and DENSO P 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 DENSO P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Aktiengesellschaft and DENSO P ADR, you can compare the effects of market volatilities on Continental Aktiengesellscha and DENSO P 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 DENSO P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and DENSO P.
Diversification Opportunities for Continental Aktiengesellscha and DENSO P
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Continental and DENSO is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and DENSO P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENSO P ADR 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 DENSO P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENSO P ADR has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and DENSO P go up and down completely randomly.
Pair Corralation between Continental Aktiengesellscha and DENSO P
Assuming the 90 days trading horizon Continental Aktiengesellscha is expected to generate 1.02 times less return on investment than DENSO P. But when comparing it to its historical volatility, Continental Aktiengesellschaft is 1.05 times less risky than DENSO P. It trades about 0.02 of its potential returns per unit of risk. DENSO P ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,073 in DENSO P ADR on September 23, 2024 and sell it today you would earn a total of 157.00 from holding DENSO P ADR or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Aktiengesellschaft vs. DENSO P ADR
Performance |
| Timeline |
| Continental Aktiengesellscha |
| DENSO P ADR |
Continental Aktiengesellscha and DENSO P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Aktiengesellscha and DENSO P
The main advantage of trading using opposite Continental Aktiengesellscha and DENSO P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha position performs unexpectedly, DENSO P 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 DENSO P will offset losses from the drop in DENSO P's long position.| Continental Aktiengesellscha vs. Dno ASA | Continental Aktiengesellscha vs. DENSO P ADR | Continental Aktiengesellscha vs. Aptiv PLC | Continental Aktiengesellscha vs. PT Astra International |
| DENSO P vs. Dno ASA | DENSO P vs. Aptiv PLC | DENSO P vs. PT Astra International | DENSO P vs. Magna International |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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