Correlation Between Compagnie Generale and NSK
Can any of the company-specific risk be diversified away by investing in both Compagnie Generale and NSK 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 Compagnie Generale and NSK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Generale des and NSK Ltd ADR, you can compare the effects of market volatilities on Compagnie Generale and NSK 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 Compagnie Generale with a short position of NSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Generale and NSK.
Diversification Opportunities for Compagnie Generale and NSK
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Compagnie and NSK is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Generale des and NSK Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSK Ltd ADR and Compagnie Generale 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 Compagnie Generale des are associated (or correlated) with NSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSK Ltd ADR has no effect on the direction of Compagnie Generale i.e., Compagnie Generale and NSK go up and down completely randomly.
Pair Corralation between Compagnie Generale and NSK
Assuming the 90 days horizon Compagnie Generale des is expected to generate 0.7 times more return on investment than NSK. However, Compagnie Generale des is 1.43 times less risky than NSK. It trades about 0.04 of its potential returns per unit of risk. NSK Ltd ADR is currently generating about -0.01 per unit of risk. If you would invest 1,302 in Compagnie Generale des on August 27, 2024 and sell it today you would earn a total of 316.00 from holding Compagnie Generale des or generate 24.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Generale des vs. NSK Ltd ADR
Performance |
| Timeline |
| Compagnie Generale des |
| NSK Ltd ADR |
Compagnie Generale and NSK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Generale and NSK
The main advantage of trading using opposite Compagnie Generale and NSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Generale position performs unexpectedly, NSK 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 NSK will offset losses from the drop in NSK's long position.| Compagnie Generale vs. Allison Transmission Holdings | Compagnie Generale vs. Luminar Technologies | Compagnie Generale vs. Lear Corporation | Compagnie Generale vs. BorgWarner |
| NSK vs. Allison Transmission Holdings | NSK vs. Luminar Technologies | NSK vs. Lear Corporation | NSK vs. BorgWarner |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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