Correlation Between Continental and Compagnie Generale
Can any of the company-specific risk be diversified away by investing in both Continental and Compagnie Generale 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 and Compagnie Generale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental AG PK and Compagnie Generale des, you can compare the effects of market volatilities on Continental and Compagnie Generale 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 with a short position of Compagnie Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Compagnie Generale.
Diversification Opportunities for Continental and Compagnie Generale
-0.1 | Correlation Coefficient |
Good 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 AG PK and Compagnie Generale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Generale des and Continental 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 AG PK are associated (or correlated) with Compagnie Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Generale des has no effect on the direction of Continental i.e., Continental and Compagnie Generale go up and down completely randomly.
Pair Corralation between Continental and Compagnie Generale
Assuming the 90 days horizon Continental AG PK is expected to generate 2.8 times more return on investment than Compagnie Generale. However, Continental is 2.8 times more volatile than Compagnie Generale des. It trades about 0.1 of its potential returns per unit of risk. Compagnie Generale des is currently generating about -0.16 per unit of risk. If you would invest 613.00 in Continental AG PK on August 30, 2024 and sell it today you would earn a total of 37.00 from holding Continental AG PK or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Continental AG PK vs. Compagnie Generale des
Performance |
| Timeline |
| Continental AG PK |
| Compagnie Generale des |
Continental and Compagnie Generale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental and Compagnie Generale
The main advantage of trading using opposite Continental and Compagnie Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental position performs unexpectedly, Compagnie Generale 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 Generale will offset losses from the drop in Compagnie Generale's long position.| Continental vs. Compagnie Gnrale des | Continental vs. Bridgestone Corp ADR | Continental vs. Continental Aktiengesellschaft | Continental vs. Douglas Dynamics |
| Compagnie Generale vs. Continental Aktiengesellschaft | Compagnie Generale vs. Bridgestone Corp ADR | Compagnie Generale vs. Goodyear Tire Rubber | Compagnie Generale vs. Brembo SpA |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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