Correlation Between Continental and Optec International

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

By analyzing existing cross correlation between Continental AG PK and Optec International, you can compare the effects of market volatilities on Continental and Optec International 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 with a short position of Optec International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Optec International.

Diversification Opportunities for Continental and Optec International

0.0

Correlation Coefficient

Continental  Optec International

Pay attention - limited upside

The 3 months correlation between Continental and Optec is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Continental AG PK and Optec International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optec International and Continental 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 AG PK are associated (or correlated) with Optec International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optec International has no effect on the direction of Continental i.e., Continental and Optec International go up and down completely randomly.

Pair Corralation between Continental and Optec International

If you would invest  685.00  in Continental AG PK on December 4, 2024 and sell it today you would earn a total of  26.00  from holding Continental AG PK or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Continental AG PK  vs.  Optec International

Continental AG PK

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Continental AG PK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Continental may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Optec International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optec International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Optec International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Continental and Optec International

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

The idea behind Continental AG PK and Optec International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.