Correlation Between Capital Drilling and Compagnie

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

By analyzing existing cross correlation between Capital Drilling and Compagnie de Saint Gobain, you can compare the effects of market volatilities on Capital Drilling and Compagnie 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 Capital Drilling with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Drilling and Compagnie.

Diversification Opportunities for Capital Drilling and Compagnie

0.5

Correlation Coefficient

Capital Drilling  Compagnie

Very weak diversification

The 3 months correlation between Capital and Compagnie is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and Capital Drilling 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 Capital Drilling are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Capital Drilling i.e., Capital Drilling and Compagnie go up and down completely randomly.

Pair Corralation between Capital Drilling and Compagnie

Assuming the 90 days trading horizon Capital Drilling is expected to generate 0.81 times more return on investment than Compagnie. However, Capital Drilling is 1.23 times less risky than Compagnie. It trades about 0.21 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.15 per unit of risk. If you would invest  6,940  in Capital Drilling on April 21, 2025 and sell it today you would earn a total of  2,360  from holding Capital Drilling or generate 34.01% return on investment over 90 days.

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

Capital Drilling  vs.  Compagnie de Saint Gobain

Capital Drilling

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Drilling are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Capital Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Compagnie de Saint

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Compagnie exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Drilling and Compagnie

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

The idea behind Capital Drilling and Compagnie de Saint Gobain 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.