Correlation Between ARISTOCRAT LEISURE and Compugroup Medical
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and Compugroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Compugroup Medical SE, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of Compugroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Compugroup Medical.
Diversification Opportunities for ARISTOCRAT LEISURE and Compugroup Medical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARISTOCRAT and Compugroup is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Compugroup Medical go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Compugroup Medical
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.35 times more return on investment than Compugroup Medical. However, ARISTOCRAT LEISURE is 2.82 times less risky than Compugroup Medical. It trades about 0.13 of its potential returns per unit of risk. Compugroup Medical SE is currently generating about -0.03 per unit of risk. If you would invest 2,206 in ARISTOCRAT LEISURE on October 25, 2024 and sell it today you would earn a total of 1,994 from holding ARISTOCRAT LEISURE or generate 90.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Compugroup Medical SE
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Compugroup Medical |
ARISTOCRAT LEISURE and Compugroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Compugroup Medical
The main advantage of trading using opposite ARISTOCRAT LEISURE and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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