Correlation Between Compagnie Gnrale and Continental Aktiengesellscha

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

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

Diversification Opportunities for Compagnie Gnrale and Continental Aktiengesellscha

-0.34

Correlation Coefficient

Compagnie Gnrale  Continental Aktiengesellscha

Very good diversification

The 3 months correlation between Compagnie and Continental is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Gnrale des and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha and Compagnie Gnrale 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 Compagnie Gnrale des are associated (or correlated) with Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of Compagnie Gnrale i.e., Compagnie Gnrale and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between Compagnie Gnrale and Continental Aktiengesellscha

Assuming the 90 days horizon Compagnie Gnrale des is expected to generate 1.0 times more return on investment than Continental Aktiengesellscha. However, Compagnie Gnrale is 1.0 times more volatile than Continental Aktiengesellschaft. It trades about 0.02 of its potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about -0.01 per unit of risk. If you would invest  3,421  in Compagnie Gnrale des on September 14, 2024 and sell it today you would lose (26.00) from holding Compagnie Gnrale des or give up 0.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.65%
Values	Daily Returns

Compagnie Gnrale des  vs.  Continental Aktiengesellschaft

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.

Continental Aktiengesellscha

Risk-Adjusted Performance

6 of 100

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.

Pair Trading with Compagnie Gnrale and Continental Aktiengesellscha

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

The idea behind Compagnie Gnrale des and Continental Aktiengesellschaft 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.