Correlation Between CompuGroup Medical and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and Avanos 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 CompuGroup Medical and Avanos Medical 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 Avanos Medical, you can compare the effects of market volatilities on CompuGroup Medical and Avanos 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 CompuGroup Medical with a short position of Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and Avanos Medical.
Diversification Opportunities for CompuGroup Medical and Avanos Medical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CompuGroup and Avanos is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical 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 Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and Avanos Medical go up and down completely randomly.
Pair Corralation between CompuGroup Medical and Avanos Medical
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 0.48 times more return on investment than Avanos Medical. However, CompuGroup Medical SE is 2.09 times less risky than Avanos Medical. It trades about 0.02 of its potential returns per unit of risk. Avanos Medical is currently generating about -0.12 per unit of risk. If you would invest 1,401 in CompuGroup Medical SE on August 26, 2024 and sell it today you would earn a total of 4.00 from holding CompuGroup Medical SE or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical SE vs. Avanos Medical
Performance |
| Timeline |
| CompuGroup Medical |
| Avanos Medical |
CompuGroup Medical and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and Avanos Medical
The main advantage of trading using opposite CompuGroup Medical and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, Avanos 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| CompuGroup Medical vs. Evolent Health | CompuGroup Medical vs. Superior Plus Corp | CompuGroup Medical vs. NMI Holdings | CompuGroup Medical vs. Origin Agritech |
| Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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