Correlation Between Douglas Dynamics and Continental Aktiengesellscha

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

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

Diversification Opportunities for Douglas Dynamics and Continental Aktiengesellscha

-0.06

Correlation Coefficient

Douglas Dynamics  Continental Aktiengesellscha

Good diversification

The 3 months correlation between Douglas and Continental is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Dynamics and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha and Douglas Dynamics 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 Douglas Dynamics 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 Douglas Dynamics i.e., Douglas Dynamics and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between Douglas Dynamics and Continental Aktiengesellscha

Given the investment horizon of 90 days Douglas Dynamics is expected to under-perform the Continental Aktiengesellscha. But the stock apears to be less risky and, when comparing its historical volatility, Douglas Dynamics is 1.64 times less risky than Continental Aktiengesellscha. The stock trades about -0.02 of its potential returns per unit of risk. The Continental Aktiengesellschaft is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,888  in Continental Aktiengesellschaft on October 7, 2024 and sell it today you would lose (207.00) from holding Continental Aktiengesellschaft or give up 3.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.38%
Values	Daily Returns

Douglas Dynamics  vs.  Continental Aktiengesellschaft

Douglas Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Douglas Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Continental Aktiengesellscha

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Continental Aktiengesellscha may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Douglas Dynamics and Continental Aktiengesellscha

The main advantage of trading using opposite Douglas Dynamics and Continental Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Dynamics 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 Douglas Dynamics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.