Correlation Between Continental Aktiengesellscha and Brembo SpA

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

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

Diversification Opportunities for Continental Aktiengesellscha and Brembo SpA

-0.63

Correlation Coefficient

Continental Aktiengesellscha  Brembo SpA

Excellent diversification

The 3 months correlation between Continental and Brembo is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and Brembo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brembo SpA 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 Brembo SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brembo SpA has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Brembo SpA go up and down completely randomly.

Pair Corralation between Continental Aktiengesellscha and Brembo SpA

If you would invest  6,787  in Continental Aktiengesellschaft on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Continental Aktiengesellschaft or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Continental Aktiengesellschaft  vs.  Brembo SpA

Continental Aktiengesellscha

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Continental Aktiengesellscha may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Brembo SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brembo SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Continental Aktiengesellscha and Brembo SpA

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

The idea behind Continental Aktiengesellschaft and Brembo SpA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.