Correlation Between Compugroup Medical and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both Compugroup Medical and Reliance Steel 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 Compugroup Medical and Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compugroup Medical SE and Reliance Steel Aluminum, you can compare the effects of market volatilities on Compugroup Medical and Reliance Steel 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 Compugroup Medical with a short position of Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugroup Medical and Reliance Steel.
Diversification Opportunities for Compugroup Medical and Reliance Steel
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compugroup and Reliance is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum and Compugroup 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 Compugroup Medical SE are associated (or correlated) with Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and Reliance Steel go up and down completely randomly.
Pair Corralation between Compugroup Medical and Reliance Steel
Assuming the 90 days horizon Compugroup Medical SE is expected to under-perform the Reliance Steel. In addition to that, Compugroup Medical is 1.69 times more volatile than Reliance Steel Aluminum. It trades about -0.09 of its total potential returns per unit of risk. Reliance Steel Aluminum is currently generating about 0.01 per unit of volatility. If you would invest 30,856 in Reliance Steel Aluminum on September 3, 2024 and sell it today you would lose (406.00) from holding Reliance Steel Aluminum or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compugroup Medical SE vs. Reliance Steel Aluminum
Performance |
| Timeline |
| Compugroup Medical |
| Reliance Steel Aluminum |
Compugroup Medical and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compugroup Medical and Reliance Steel
The main advantage of trading using opposite Compugroup Medical and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compugroup Medical position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| Compugroup Medical vs. ATRESMEDIA | Compugroup Medical vs. Corsair Gaming | Compugroup Medical vs. Hollywood Bowl Group | Compugroup Medical vs. RCS MediaGroup SpA |
| Reliance Steel vs. ArcelorMittal | Reliance Steel vs. Steel Dynamics | Reliance Steel vs. NIPPON STEEL SPADR | Reliance Steel vs. POSCO 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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