Correlation Between Compagnie Generale and Encres Dubuit

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

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

Diversification Opportunities for Compagnie Generale and Encres Dubuit

-0.7

Correlation Coefficient

Compagnie Generale  Encres Dubuit

Excellent diversification

The 3 months correlation between Compagnie and Encres is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Generale des and Encres Dubuit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encres Dubuit SA and Compagnie Generale 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 Generale des are associated (or correlated) with Encres Dubuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encres Dubuit SA has no effect on the direction of Compagnie Generale i.e., Compagnie Generale and Encres Dubuit go up and down completely randomly.

Pair Corralation between Compagnie Generale and Encres Dubuit

Assuming the 90 days horizon Compagnie Generale des is expected to under-perform the Encres Dubuit. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie Generale des is 2.41 times less risky than Encres Dubuit. The stock trades about -0.14 of its potential returns per unit of risk. The Encres Dubuit SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  204.00  in Encres Dubuit SA on September 24, 2024 and sell it today you would earn a total of  78.00  from holding Encres Dubuit SA or generate 38.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Compagnie Generale des  vs.  Encres Dubuit SA

Compagnie Generale des

Risk-Adjusted Performance

0 of 100

Very Weak

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

Encres Dubuit SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Encres Dubuit SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Encres Dubuit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie Generale and Encres Dubuit

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

The idea behind Compagnie Generale des and Encres Dubuit SA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.