Correlation Between Continental Aktiengesellscha and Commercial Vehicle

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

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

Diversification Opportunities for Continental Aktiengesellscha and Commercial Vehicle

-0.51

Correlation Coefficient

Continental Aktiengesellscha  Commercial Vehicle

Excellent diversification

The 3 months correlation between Continental and Commercial is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Commercial Vehicle go up and down completely randomly.

Pair Corralation between Continental Aktiengesellscha and Commercial Vehicle

Assuming the 90 days horizon Continental Aktiengesellschaft is expected to generate 0.89 times more return on investment than Commercial Vehicle. However, Continental Aktiengesellschaft is 1.13 times less risky than Commercial Vehicle. It trades about 0.08 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.06 per unit of risk. If you would invest  6,514  in Continental Aktiengesellschaft on December 4, 2024 and sell it today you would earn a total of  866.00  from holding Continental Aktiengesellschaft or generate 13.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Continental Aktiengesellschaft  vs.  Commercial Vehicle Group

Continental Aktiengesellscha

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Continental Aktiengesellscha reported solid returns over the last few months and may actually be approaching a breakup point.

Commercial Vehicle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commercial Vehicle Group 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Continental Aktiengesellscha and Commercial Vehicle

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

The idea behind Continental Aktiengesellschaft and Commercial Vehicle Group 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.