Correlation Between Iridium Communications and Compugroup Medical
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and Compugroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Compugroup Medical SE, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of Compugroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Compugroup Medical.
Diversification Opportunities for Iridium Communications and Compugroup Medical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Iridium and Compugroup is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and Compugroup Medical go up and down completely randomly.
Pair Corralation between Iridium Communications and Compugroup Medical
Assuming the 90 days horizon Iridium Communications is expected to generate 0.74 times more return on investment than Compugroup Medical. However, Iridium Communications is 1.35 times less risky than Compugroup Medical. It trades about -0.03 of its potential returns per unit of risk. Compugroup Medical SE is currently generating about -0.04 per unit of risk. If you would invest 4,317 in Iridium Communications on September 12, 2024 and sell it today you would lose (1,389) from holding Iridium Communications or give up 32.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Compugroup Medical SE
Performance |
| Timeline |
| Iridium Communications |
| Compugroup Medical |
Iridium Communications and Compugroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Compugroup Medical
The main advantage of trading using opposite Iridium Communications and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. SIVERS SEMICONDUCTORS AB | Iridium Communications vs. Norsk Hydro ASA | Iridium Communications vs. Reliance Steel Aluminum |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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