Correlation Between CompuGroup Medical and EDP Renovveis
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and EDP Renovveis 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 EDP Renovveis 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 EDP Renovveis SA, you can compare the effects of market volatilities on CompuGroup Medical and EDP Renovveis 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 EDP Renovveis. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and EDP Renovveis.
Diversification Opportunities for CompuGroup Medical and EDP Renovveis
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CompuGroup and EDP is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and EDP Renovveis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Renovveis SA 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 EDP Renovveis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Renovveis SA has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and EDP Renovveis go up and down completely randomly.
Pair Corralation between CompuGroup Medical and EDP Renovveis
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 1.72 times more return on investment than EDP Renovveis. However, CompuGroup Medical is 1.72 times more volatile than EDP Renovveis SA. It trades about -0.03 of its potential returns per unit of risk. EDP Renovveis SA is currently generating about -0.09 per unit of risk. If you would invest 3,536 in CompuGroup Medical SE on September 14, 2024 and sell it today you would lose (1,374) from holding CompuGroup Medical SE or give up 38.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
CompuGroup Medical SE vs. EDP Renovveis SA
Performance |
| Timeline |
| CompuGroup Medical |
| EDP Renovveis SA |
CompuGroup Medical and EDP Renovveis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and EDP Renovveis
The main advantage of trading using opposite CompuGroup Medical and EDP Renovveis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, EDP Renovveis 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 EDP Renovveis will offset losses from the drop in EDP Renovveis' long position.| CompuGroup Medical vs. CITY OFFICE REIT | CompuGroup Medical vs. InterContinental Hotels Group | CompuGroup Medical vs. Host Hotels Resorts | CompuGroup Medical vs. MIRAMAR HOTEL INV |
| EDP Renovveis vs. KAUFMAN ET BROAD | EDP Renovveis vs. Charter Communications | EDP Renovveis vs. Fukuyama Transporting Co | EDP Renovveis vs. BII Railway Transportation |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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