Correlation Between Compagnie Generale and Vinci SA

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

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

Diversification Opportunities for Compagnie Generale and Vinci SA

0.77

Correlation Coefficient

Compagnie Generale  Vinci SA

Poor diversification

The 3 months correlation between Compagnie and Vinci is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Generale des and Vinci SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA ADR and Compagnie Generale 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 Generale des are associated (or correlated) with Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA ADR has no effect on the direction of Compagnie Generale i.e., Compagnie Generale and Vinci SA go up and down completely randomly.

Pair Corralation between Compagnie Generale and Vinci SA

Assuming the 90 days horizon Compagnie Generale des is expected to generate 0.86 times more return on investment than Vinci SA. However, Compagnie Generale des is 1.16 times less risky than Vinci SA. It trades about -0.08 of its potential returns per unit of risk. Vinci SA ADR is currently generating about -0.07 per unit of risk. If you would invest  1,950  in Compagnie Generale des on October 9, 2024 and sell it today you would lose (308.00) from holding Compagnie Generale des or give up 15.79% of portfolio value over 90 days.

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

Compagnie Generale des  vs.  Vinci SA ADR

Compagnie Generale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Generale des has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vinci SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Compagnie Generale and Vinci SA

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

The idea behind Compagnie Generale des and Vinci SA ADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.