Correlation Between DXC Technology and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both DXC Technology 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 DXC Technology and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology Co and CompuGroup Medical SE, you can compare the effects of market volatilities on DXC Technology 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 DXC Technology with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and CompuGroup Medical.
Diversification Opportunities for DXC Technology and CompuGroup Medical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DXC and CompuGroup is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and DXC Technology 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 DXC Technology 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 DXC Technology i.e., DXC Technology and CompuGroup Medical go up and down completely randomly.
Pair Corralation between DXC Technology and CompuGroup Medical
Assuming the 90 days trading horizon DXC Technology is expected to generate 4.46 times less return on investment than CompuGroup Medical. But when comparing it to its historical volatility, DXC Technology Co is 1.95 times less risky than CompuGroup Medical. It trades about 0.07 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,376 in CompuGroup Medical SE on September 12, 2024 and sell it today you would earn a total of 794.00 from holding CompuGroup Medical SE or generate 57.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. CompuGroup Medical SE
Performance |
| Timeline |
| DXC Technology |
| CompuGroup Medical |
DXC Technology and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and CompuGroup Medical
The main advantage of trading using opposite DXC Technology and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology 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.| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
| CompuGroup Medical vs. Evolent Health | CompuGroup Medical vs. Compugroup Medical SE | CompuGroup Medical vs. Superior Plus Corp | CompuGroup Medical vs. NMI Holdings |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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