Correlation Between CompuGroup Medical and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES, you can compare the effects of market volatilities on CompuGroup Medical and JAPAN AIRLINES 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 JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and JAPAN AIRLINES.
Diversification Opportunities for CompuGroup Medical and JAPAN AIRLINES
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CompuGroup and JAPAN is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between CompuGroup Medical and JAPAN AIRLINES
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 0.47 times more return on investment than JAPAN AIRLINES. However, CompuGroup Medical SE is 2.11 times less risky than JAPAN AIRLINES. It trades about 0.21 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about -0.36 per unit of risk. If you would invest 2,166 in CompuGroup Medical SE on October 11, 2024 and sell it today you would earn a total of 34.00 from holding CompuGroup Medical SE or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical SE vs. JAPAN AIRLINES
Performance |
| Timeline |
| CompuGroup Medical |
| JAPAN AIRLINES |
CompuGroup Medical and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and JAPAN AIRLINES
The main advantage of trading using opposite CompuGroup Medical and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, JAPAN AIRLINES 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.| CompuGroup Medical vs. FARM 51 GROUP | CompuGroup Medical vs. TITAN MACHINERY | CompuGroup Medical vs. Daito Trust Construction | CompuGroup Medical vs. MAVEN WIRELESS SWEDEN |
| JAPAN AIRLINES vs. Sims Metal Management | JAPAN AIRLINES vs. Ares Management Corp | JAPAN AIRLINES vs. OBSERVE MEDICAL ASA | JAPAN AIRLINES vs. CompuGroup Medical SE |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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