Correlation Between Vinci SA and Compagnie Generale

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

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

Diversification Opportunities for Vinci SA and Compagnie Generale

0.9

Correlation Coefficient

Vinci SA  Compagnie Generale

Almost no diversification

The 3 months correlation between Vinci and Compagnie is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA ADR 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 Vinci SA 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 Vinci SA ADR 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 Vinci SA i.e., Vinci SA and Compagnie Generale go up and down completely randomly.

Pair Corralation between Vinci SA and Compagnie Generale

Assuming the 90 days horizon Vinci SA ADR is expected to generate 1.02 times more return on investment than Compagnie Generale. However, Vinci SA is 1.02 times more volatile than Compagnie Generale des. It trades about -0.17 of its potential returns per unit of risk. Compagnie Generale des is currently generating about -0.21 per unit of risk. If you would invest  3,003  in Vinci SA ADR on September 23, 2024 and sell it today you would lose (459.00) from holding Vinci SA ADR or give up 15.28% of portfolio value over 90 days.

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

Vinci SA ADR  vs.  Compagnie Generale des

Vinci SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly 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.

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. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly 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.

Pair Trading with Vinci SA and Compagnie Generale

The main advantage of trading using opposite Vinci SA and Compagnie Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci SA 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 Vinci SA ADR 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.