Correlation Between Compagnie Générale and Douglas Dynamics

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

Diversification Opportunities for Compagnie Générale and Douglas Dynamics

0.43

Correlation Coefficient

Compagnie Générale  Douglas Dynamics

Very weak diversification

The 3 months correlation between Compagnie and Douglas is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Gnrale des and Douglas Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Dynamics and Compagnie Générale 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 Douglas Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Dynamics has no effect on the direction of Compagnie Générale i.e., Compagnie Générale and Douglas Dynamics go up and down completely randomly.

Pair Corralation between Compagnie Générale and Douglas Dynamics

Assuming the 90 days horizon Compagnie Gnrale des is expected to generate 1.87 times more return on investment than Douglas Dynamics. However, Compagnie Générale is 1.87 times more volatile than Douglas Dynamics. It trades about 0.04 of its potential returns per unit of risk. Douglas Dynamics is currently generating about 0.01 per unit of risk. If you would invest  3,405  in Compagnie Gnrale des on December 29, 2024 and sell it today you would earn a total of  133.00  from holding Compagnie Gnrale des or generate 3.91% return on investment over 90 days.

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

Compagnie Gnrale des  vs.  Douglas Dynamics

Compagnie Gnrale des

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Gnrale des are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Compagnie Générale may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Douglas Dynamics

Risk-Adjusted Performance

Insignificant

Over the last 90 days Douglas Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Douglas Dynamics is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Compagnie Générale and Douglas Dynamics

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

The idea behind Compagnie Gnrale des and Douglas Dynamics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.