Correlation Between Continental Aktiengesellscha and Compagnie Gnrale

Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha and Compagnie Gnrale 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 Gnrale 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 Gnrale 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 Gnrale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and Compagnie Gnrale.

Diversification Opportunities for Continental Aktiengesellscha and Compagnie Gnrale

-0.63

Correlation Coefficient

Continental Aktiengesellscha  Compagnie Gnrale

Excellent diversification

The 3 months correlation between Continental and Compagnie is -0.63. 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 Gnrale. 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 Gnrale go up and down completely randomly.

Pair Corralation between Continental Aktiengesellscha and Compagnie Gnrale

Assuming the 90 days horizon Continental Aktiengesellscha is expected to generate 5.89 times less return on investment than Compagnie Gnrale. In addition to that, Continental Aktiengesellscha is 1.47 times more volatile than Compagnie Gnrale des. It trades about 0.01 of its total potential returns per unit of risk. Compagnie Gnrale des is currently generating about 0.11 per unit of volatility. If you would invest  3,029  in Compagnie Gnrale des on February 1, 2024 and sell it today you would earn a total of  763.00  from holding Compagnie Gnrale des or generate 25.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Continental Aktiengesellschaft  vs.  Compagnie Gnrale des

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 June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Compagnie Gnrale des

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Gnrale des are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Compagnie Gnrale reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Continental Aktiengesellscha and Compagnie Gnrale

The main advantage of trading using opposite Continental Aktiengesellscha and Compagnie Gnrale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha position performs unexpectedly, Compagnie Gnrale 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 Gnrale will offset losses from the drop in Compagnie Gnrale'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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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.