Correlation Between Continental Aktiengesellscha and Mobileye Global

Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha and Mobileye Global 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 Mobileye Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Continental Aktiengesellschaft and Mobileye Global Class, you can compare the effects of market volatilities on Continental Aktiengesellscha and Mobileye Global 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 Mobileye Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and Mobileye Global.

Diversification Opportunities for Continental Aktiengesellscha and Mobileye Global

-0.78

Correlation Coefficient

Continental Aktiengesellscha  Mobileye Global

Pay attention - limited upside

The 3 months correlation between Continental and Mobileye is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and Mobileye Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobileye Global Class 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 Mobileye Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobileye Global Class has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Mobileye Global go up and down completely randomly.

Pair Corralation between Continental Aktiengesellscha and Mobileye Global

Assuming the 90 days horizon Continental Aktiengesellschaft is expected to under-perform the Mobileye Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, Continental Aktiengesellschaft is 1.31 times less risky than Mobileye Global. The pink sheet trades about -0.31 of its potential returns per unit of risk. The Mobileye Global Class is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  3,215  in Mobileye Global Class on January 28, 2024 and sell it today you would lose (295.00) from holding Mobileye Global Class or give up 9.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Continental Aktiengesellschaft  vs.  Mobileye Global Class

Continental Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Continental Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mobileye Global Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Mobileye Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Continental Aktiengesellscha and Mobileye Global

The main advantage of trading using opposite Continental Aktiengesellscha and Mobileye Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha position performs unexpectedly, Mobileye Global 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 Mobileye Global will offset losses from the drop in Mobileye Global's long position.

The idea behind Continental Aktiengesellschaft and Mobileye Global Class 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.