Correlation Between Compagnie Gnrale and Lear

Can any of the company-specific risk be diversified away by investing in both Compagnie Gnrale 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 Compagnie Gnrale and Lear 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 Lear Corporation, you can compare the effects of market volatilities on Compagnie Gnrale 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 Compagnie Gnrale with a short position of Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Gnrale and Lear.

Diversification Opportunities for Compagnie Gnrale and Lear

0.81

Correlation Coefficient

Compagnie Gnrale  Lear

Very poor diversification

The 3 months correlation between Compagnie and Lear is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Gnrale des and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear 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 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 Compagnie Gnrale i.e., Compagnie Gnrale and Lear go up and down completely randomly.

Pair Corralation between Compagnie Gnrale and Lear

Assuming the 90 days horizon Compagnie Gnrale des is expected to under-perform the Lear. In addition to that, Compagnie Gnrale is 2.25 times more volatile than Lear Corporation. It trades about -0.02 of its total potential returns per unit of risk. Lear Corporation is currently generating about -0.03 per unit of volatility. If you would invest  10,332  in Lear Corporation on September 15, 2024 and sell it today you would lose (497.00) from holding Lear Corporation or give up 4.81% of portfolio value over 90 days.

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

Compagnie Gnrale des  vs.  Lear Corp.

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 nearly stable fundamental indicators, Compagnie Gnrale is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 somewhat strong technical and fundamental indicators, Lear is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compagnie Gnrale and Lear

The main advantage of trading using opposite Compagnie Gnrale and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Gnrale 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 Compagnie Gnrale des 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.