Correlation Between Avanos Medical and Compugroup Medical
Can any of the company-specific risk be diversified away by investing in both Avanos Medical 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 Avanos Medical and Compugroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanos Medical and Compugroup Medical SE, you can compare the effects of market volatilities on Avanos Medical 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 Avanos Medical with a short position of Compugroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanos Medical and Compugroup Medical.
Diversification Opportunities for Avanos Medical and Compugroup Medical
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Avanos and Compugroup is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and Avanos 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 Avanos Medical 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 Avanos Medical i.e., Avanos Medical and Compugroup Medical go up and down completely randomly.
Pair Corralation between Avanos Medical and Compugroup Medical
Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the Compugroup Medical. In addition to that, Avanos Medical is 1.15 times more volatile than Compugroup Medical SE. It trades about -0.07 of its total potential returns per unit of risk. Compugroup Medical SE is currently generating about -0.02 per unit of volatility. If you would invest 1,595 in Compugroup Medical SE on August 29, 2024 and sell it today you would lose (91.00) from holding Compugroup Medical SE or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanos Medical vs. Compugroup Medical SE
Performance |
| Timeline |
| Avanos Medical |
| Compugroup Medical |
Avanos Medical and Compugroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanos Medical and Compugroup Medical
The main advantage of trading using opposite Avanos Medical and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical 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.| Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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