Correlation Between Aeorema Communications and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Aeorema 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 Aeorema 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 Aeorema Communications Plc and CompuGroup Medical AG, you can compare the effects of market volatilities on Aeorema 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 Aeorema Communications with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and CompuGroup Medical.
Diversification Opportunities for Aeorema Communications and CompuGroup Medical
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aeorema and CompuGroup is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and CompuGroup Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Aeorema 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 Aeorema Communications Plc 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 Aeorema Communications i.e., Aeorema Communications and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Aeorema Communications and CompuGroup Medical
Assuming the 90 days trading horizon Aeorema Communications is expected to generate 2.74 times less return on investment than CompuGroup Medical. But when comparing it to its historical volatility, Aeorema Communications Plc is 1.54 times less risky than CompuGroup Medical. It trades about 0.18 of its potential returns per unit of risk. CompuGroup Medical AG is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,365 in CompuGroup Medical AG on September 2, 2024 and sell it today you would earn a total of 230.00 from holding CompuGroup Medical AG or generate 16.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. CompuGroup Medical AG
Performance |
| Timeline |
| Aeorema Communications |
| CompuGroup Medical |
Aeorema Communications and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and CompuGroup Medical
The main advantage of trading using opposite Aeorema Communications and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema 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.| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
| CompuGroup Medical vs. Uniper SE | CompuGroup Medical vs. Mulberry Group PLC | CompuGroup Medical vs. London Security Plc | CompuGroup Medical vs. Triad Group PLC |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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