Correlation Between Compagnie and Compagnie Generale

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

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

Diversification Opportunities for Compagnie and Compagnie Generale

0.03

Correlation Coefficient

Compagnie  Compagnie Generale

Significant diversification

The 3 months correlation between Compagnie and Compagnie is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain 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 Compagnie 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 de Saint Gobain 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 Compagnie i.e., Compagnie and Compagnie Generale go up and down completely randomly.

Pair Corralation between Compagnie and Compagnie Generale

Assuming the 90 days horizon Compagnie de Saint Gobain is expected to generate 1.31 times more return on investment than Compagnie Generale. However, Compagnie is 1.31 times more volatile than Compagnie Generale des. It trades about 0.02 of its potential returns per unit of risk. Compagnie Generale des is currently generating about -0.08 per unit of risk. If you would invest  1,701  in Compagnie de Saint Gobain on October 9, 2024 and sell it today you would earn a total of  78.00  from holding Compagnie de Saint Gobain or generate 4.59% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Compagnie Generale des

Compagnie de Saint

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie de Saint Gobain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Compagnie is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Compagnie Generale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Generale des has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Compagnie and Compagnie Generale

The main advantage of trading using opposite Compagnie and Compagnie Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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.

The idea behind Compagnie de Saint Gobain and Compagnie Generale 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.