Correlation Between Compagnie Gnrale and Bridgestone

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

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

Diversification Opportunities for Compagnie Gnrale and Bridgestone

0.73

Correlation Coefficient

Compagnie Gnrale  Bridgestone

Poor diversification

The 3 months correlation between Compagnie and Bridgestone is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Gnrale des and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone and Compagnie Gnrale 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 Gnrale des are associated (or correlated) with Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of Compagnie Gnrale i.e., Compagnie Gnrale and Bridgestone go up and down completely randomly.

Pair Corralation between Compagnie Gnrale and Bridgestone

Assuming the 90 days horizon Compagnie Gnrale des is expected to generate 0.99 times more return on investment than Bridgestone. However, Compagnie Gnrale des is 1.01 times less risky than Bridgestone. It trades about 0.02 of its potential returns per unit of risk. Bridgestone is currently generating about 0.01 per unit of risk. If you would invest  3,000  in Compagnie Gnrale des on September 26, 2024 and sell it today you would earn a total of  139.00  from holding Compagnie Gnrale des or generate 4.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.9%
Values	Daily Returns

Compagnie Gnrale des  vs.  Bridgestone

Compagnie Gnrale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Gnrale des has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bridgestone

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgestone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Compagnie Gnrale and Bridgestone

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

The idea behind Compagnie Gnrale des and Bridgestone 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.