Correlation Between BYD and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both BYD and CompuGroup Medical 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 BYD and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and CompuGroup Medical AG, you can compare the effects of market volatilities on BYD and CompuGroup Medical 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 BYD with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and CompuGroup Medical.
Diversification Opportunities for BYD and CompuGroup Medical
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYD and CompuGroup is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and CompuGroup Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and BYD 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 BYD Co are associated (or correlated) with CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of BYD i.e., BYD and CompuGroup Medical go up and down completely randomly.
Pair Corralation between BYD and CompuGroup Medical
Assuming the 90 days trading horizon BYD is expected to generate 13.67 times less return on investment than CompuGroup Medical. But when comparing it to its historical volatility, BYD Co is 3.77 times less risky than CompuGroup Medical. It trades about 0.03 of its potential returns per unit of risk. CompuGroup Medical AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,622 in CompuGroup Medical AG on October 25, 2024 and sell it today you would earn a total of 0.00 from holding CompuGroup Medical AG or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co vs. CompuGroup Medical AG
Performance |
| Timeline |
| BYD Co |
| CompuGroup Medical |
BYD and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and CompuGroup Medical
The main advantage of trading using opposite BYD and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.| BYD vs. LBG Media PLC | BYD vs. Synthomer plc | BYD vs. G5 Entertainment AB | BYD vs. Ecclesiastical Insurance Office |
| CompuGroup Medical vs. Flutter Entertainment PLC | CompuGroup Medical vs. Everyman Media Group | CompuGroup Medical vs. One Media iP | CompuGroup Medical vs. Cembra Money Bank |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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