Correlation Between Diagnostic Medical and CMG Cleantech
Can any of the company-specific risk be diversified away by investing in both Diagnostic Medical and CMG Cleantech 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 Diagnostic Medical and CMG Cleantech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diagnostic Medical Systems and CMG Cleantech SA, you can compare the effects of market volatilities on Diagnostic Medical and CMG Cleantech 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 Diagnostic Medical with a short position of CMG Cleantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diagnostic Medical and CMG Cleantech.
Diversification Opportunities for Diagnostic Medical and CMG Cleantech
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Diagnostic and CMG is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Diagnostic Medical Systems and CMG Cleantech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Cleantech SA and Diagnostic 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 Diagnostic Medical Systems are associated (or correlated) with CMG Cleantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Cleantech SA has no effect on the direction of Diagnostic Medical i.e., Diagnostic Medical and CMG Cleantech go up and down completely randomly.
Pair Corralation between Diagnostic Medical and CMG Cleantech
Assuming the 90 days trading horizon Diagnostic Medical Systems is expected to under-perform the CMG Cleantech. In addition to that, Diagnostic Medical is 5.05 times more volatile than CMG Cleantech SA. It trades about -0.1 of its total potential returns per unit of risk. CMG Cleantech SA is currently generating about 0.15 per unit of volatility. If you would invest 120.00 in CMG Cleantech SA on September 1, 2024 and sell it today you would earn a total of 3.00 from holding CMG Cleantech SA or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diagnostic Medical Systems vs. CMG Cleantech SA
Performance |
| Timeline |
| Diagnostic Medical |
| CMG Cleantech SA |
Diagnostic Medical and CMG Cleantech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diagnostic Medical and CMG Cleantech
The main advantage of trading using opposite Diagnostic Medical and CMG Cleantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diagnostic Medical position performs unexpectedly, CMG Cleantech 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 CMG Cleantech will offset losses from the drop in CMG Cleantech's long position.| Diagnostic Medical vs. CMG Cleantech SA | Diagnostic Medical vs. Axway Software | Diagnostic Medical vs. Reworld Media | Diagnostic Medical vs. Hoteles Bestprice SA |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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