Correlation Between Commercial Vehicle and Compagnie Gnrale

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

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

Diversification Opportunities for Commercial Vehicle and Compagnie Gnrale

0.8

Correlation Coefficient

Commercial Vehicle  Compagnie Gnrale

Very poor diversification

The 3 months correlation between Commercial and Compagnie is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Compagnie Gnrale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Gnrale des and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with Compagnie Gnrale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Gnrale des has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Compagnie Gnrale go up and down completely randomly.

Pair Corralation between Commercial Vehicle and Compagnie Gnrale

Given the investment horizon of 90 days Commercial Vehicle Group is expected to under-perform the Compagnie Gnrale. But the stock apears to be less risky and, when comparing its historical volatility, Commercial Vehicle Group is 1.65 times less risky than Compagnie Gnrale. The stock trades about -0.07 of its potential returns per unit of risk. The Compagnie Gnrale des is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,445  in Compagnie Gnrale des on September 14, 2024 and sell it today you would lose (50.00) from holding Compagnie Gnrale des or give up 1.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Commercial Vehicle Group  vs.  Compagnie Gnrale des

Commercial Vehicle

Risk-Adjusted Performance

0 of 100

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Compagnie Gnrale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Gnrale des has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Commercial Vehicle and Compagnie Gnrale

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

The idea behind Commercial Vehicle Group and Compagnie Gnrale 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.