Correlation Between Compagnie and Compagnie

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

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

Diversification Opportunities for Compagnie and Compagnie

0.64

Correlation Coefficient

Compagnie  Compagnie

Poor diversification

The 3 months correlation between Compagnie and Compagnie is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Chemins and Compagnie de lOdet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de lOdet and Compagnie 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 de Chemins 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 lOdet has no effect on the direction of Compagnie i.e., Compagnie and Compagnie go up and down completely randomly.

Pair Corralation between Compagnie and Compagnie

Assuming the 90 days trading horizon Compagnie de Chemins is expected to generate 2.32 times more return on investment than Compagnie. However, Compagnie is 2.32 times more volatile than Compagnie de lOdet. It trades about 0.21 of its potential returns per unit of risk. Compagnie de lOdet is currently generating about 0.16 per unit of risk. If you would invest  70,000  in Compagnie de Chemins on April 25, 2025 and sell it today you would earn a total of  21,500  from holding Compagnie de Chemins or generate 30.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Compagnie de Chemins  vs.  Compagnie de lOdet

Compagnie de Chemins

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Chemins are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie reported solid returns over the last few months and may actually be approaching a breakup point.

Compagnie de lOdet

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de lOdet are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Compagnie and Compagnie

The main advantage of trading using opposite Compagnie and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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 Compagnie de Chemins and Compagnie de lOdet 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.