Correlation Between CompuGroup Medical and Argo Group
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and Argo Group 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 Argo Group 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 Argo Group Limited, you can compare the effects of market volatilities on CompuGroup Medical and Argo Group 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 Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and Argo Group.
Diversification Opportunities for CompuGroup Medical and Argo Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between CompuGroup and Argo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical AG and Argo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group Limited 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 Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group Limited has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and Argo Group go up and down completely randomly.
Pair Corralation between CompuGroup Medical and Argo Group
Assuming the 90 days trading horizon CompuGroup Medical AG is expected to generate 4.75 times more return on investment than Argo Group. However, CompuGroup Medical is 4.75 times more volatile than Argo Group Limited. It trades about 0.1 of its potential returns per unit of risk. Argo Group Limited is currently generating about 0.01 per unit of risk. If you would invest 1,436 in CompuGroup Medical AG on September 15, 2024 and sell it today you would earn a total of 186.00 from holding CompuGroup Medical AG or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical AG vs. Argo Group Limited
Performance |
| Timeline |
| CompuGroup Medical |
| Argo Group Limited |
CompuGroup Medical and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and Argo Group
The main advantage of trading using opposite CompuGroup Medical and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group's long position.The idea behind CompuGroup Medical AG and Argo Group Limited 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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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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