Correlation Between Continental Aktiengesellscha and Lear

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

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

Diversification Opportunities for Continental Aktiengesellscha and Lear

-0.09

Correlation Coefficient

Continental Aktiengesellscha  Lear

Good diversification

The 3 months correlation between Continental and Lear is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear 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 Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Lear go up and down completely randomly.

Pair Corralation between Continental Aktiengesellscha and Lear

Assuming the 90 days horizon Continental Aktiengesellscha is expected to generate 2.3 times less return on investment than Lear. In addition to that, Continental Aktiengesellscha is 2.09 times more volatile than Lear Corporation. It trades about 0.01 of its total potential returns per unit of risk. Lear Corporation is currently generating about 0.06 per unit of volatility. If you would invest  9,319  in Lear Corporation on October 20, 2024 and sell it today you would earn a total of  113.00  from holding Lear Corporation or generate 1.21% return on investment over 90 days.

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

Continental Aktiengesellschaft  vs.  Lear Corp.

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.

Lear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lear Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and 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 Continental Aktiengesellscha and Lear

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

The idea behind Continental Aktiengesellschaft and Lear Corporation 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.