Correlation Between Douglas Dynamics and Compagnie Generale

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

By analyzing existing cross correlation between Douglas Dynamics and Compagnie Generale des, you can compare the effects of market volatilities on Douglas Dynamics and Compagnie Generale 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 Compagnie Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Dynamics and Compagnie Generale.

Diversification Opportunities for Douglas Dynamics and Compagnie Generale

0.22

Correlation Coefficient

Douglas Dynamics  Compagnie Generale

Modest diversification

The 3 months correlation between Douglas and Compagnie is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Dynamics and Compagnie Generale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Generale des 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 Compagnie Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Generale des has no effect on the direction of Douglas Dynamics i.e., Douglas Dynamics and Compagnie Generale go up and down completely randomly.

Pair Corralation between Douglas Dynamics and Compagnie Generale

Given the investment horizon of 90 days Douglas Dynamics is expected to generate 7.27 times less return on investment than Compagnie Generale. But when comparing it to its historical volatility, Douglas Dynamics is 1.02 times less risky than Compagnie Generale. It trades about 0.01 of its potential returns per unit of risk. Compagnie Generale des is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,642  in Compagnie Generale des on December 29, 2024 and sell it today you would earn a total of  142.00  from holding Compagnie Generale des or generate 8.65% return on investment over 90 days.

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

Douglas Dynamics  vs.  Compagnie Generale des

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.

Compagnie Generale des

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Generale des are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Compagnie Generale may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Douglas Dynamics and Compagnie Generale

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

The idea behind Douglas Dynamics and Compagnie Generale des 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.