Correlation Between CompuGroup Medical and Gilead Sciences
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and Gilead Sciences 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 CompuGroup Medical and Gilead Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompuGroup Medical AG and Gilead Sciences, you can compare the effects of market volatilities on CompuGroup Medical and Gilead Sciences 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 CompuGroup Medical with a short position of Gilead Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and Gilead Sciences.
Diversification Opportunities for CompuGroup Medical and Gilead Sciences
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between CompuGroup and Gilead is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical AG and Gilead Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilead Sciences and CompuGroup Medical 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 CompuGroup Medical AG are associated (or correlated) with Gilead Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilead Sciences has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and Gilead Sciences go up and down completely randomly.
Pair Corralation between CompuGroup Medical and Gilead Sciences
Assuming the 90 days trading horizon CompuGroup Medical AG is expected to generate 1.19 times more return on investment than Gilead Sciences. However, CompuGroup Medical is 1.19 times more volatile than Gilead Sciences. It trades about 0.29 of its potential returns per unit of risk. Gilead Sciences is currently generating about 0.12 per unit of risk. If you would invest 1,383 in CompuGroup Medical AG on August 31, 2024 and sell it today you would earn a total of 216.00 from holding CompuGroup Medical AG or generate 15.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical AG vs. Gilead Sciences
Performance |
| Timeline |
| CompuGroup Medical |
| Gilead Sciences |
CompuGroup Medical and Gilead Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and Gilead Sciences
The main advantage of trading using opposite CompuGroup Medical and Gilead Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, Gilead Sciences 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 Gilead Sciences will offset losses from the drop in Gilead Sciences' long position.| CompuGroup Medical vs. Neometals | CompuGroup Medical vs. Coor Service Management | CompuGroup Medical vs. Aeorema Communications Plc | CompuGroup Medical vs. JLEN Environmental Assets |
| Gilead Sciences vs. CompuGroup Medical AG | Gilead Sciences vs. Lendinvest PLC | Gilead Sciences vs. Regions Financial Corp | Gilead Sciences vs. Discover Financial Services |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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