Correlation Between AES and Compagnie

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

By analyzing existing cross correlation between The AES and Compagnie de Saint Gobain, you can compare the effects of market volatilities on AES and Compagnie 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 AES with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Compagnie.

Diversification Opportunities for AES and Compagnie

0.72

Correlation Coefficient

AES  Compagnie

Poor diversification

The 3 months correlation between AES and Compagnie is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and AES 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 The AES are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of AES i.e., AES and Compagnie go up and down completely randomly.

Pair Corralation between AES and Compagnie

Considering the 90-day investment horizon The AES is expected to generate 2.42 times more return on investment than Compagnie. However, AES is 2.42 times more volatile than Compagnie de Saint Gobain. It trades about 0.15 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.14 per unit of risk. If you would invest  982.00  in The AES on April 30, 2025 and sell it today you would earn a total of  369.00  from holding The AES or generate 37.58% return on investment over 90 days.

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

The AES  vs.  Compagnie de Saint Gobain

AES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Compagnie de Saint

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Compagnie showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AES and Compagnie

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

The idea behind The AES and Compagnie de Saint Gobain 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.