Correlation Between Continental Aktiengesellscha and Compagnie Générale
Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha 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 Continental Aktiengesellscha and Compagnie Générale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Aktiengesellschaft and Compagnie Gnrale des, you can compare the effects of market volatilities on Continental Aktiengesellscha 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 Continental Aktiengesellscha with a short position of Compagnie Générale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and Compagnie Générale.
Diversification Opportunities for Continental Aktiengesellscha and Compagnie Générale
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Continental and Compagnie is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft 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 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 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 Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Compagnie Générale go up and down completely randomly.
Pair Corralation between Continental Aktiengesellscha and Compagnie Générale
Assuming the 90 days horizon Continental Aktiengesellschaft is expected to generate 1.37 times more return on investment than Compagnie Générale. However, Continental Aktiengesellscha is 1.37 times more volatile than Compagnie Gnrale des. It trades about 0.13 of its potential returns per unit of risk. Compagnie Gnrale des is currently generating about -0.11 per unit of risk. If you would invest 6,010 in Continental Aktiengesellschaft on August 30, 2024 and sell it today you would earn a total of 610.00 from holding Continental Aktiengesellschaft or generate 10.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Aktiengesellschaft vs. Compagnie Gnrale des
Performance |
| Timeline |
| Continental Aktiengesellscha |
| Compagnie Gnrale des |
Continental Aktiengesellscha and Compagnie Générale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Aktiengesellscha and Compagnie Générale
The main advantage of trading using opposite Continental Aktiengesellscha and Compagnie Générale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha 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 Continental Aktiengesellschaft 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.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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