Correlation Between CompuGroup Medical and LG Electronics
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and LG Electronics 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 LG Electronics 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 LG Electronics, you can compare the effects of market volatilities on CompuGroup Medical and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and LG Electronics.
Diversification Opportunities for CompuGroup Medical and LG Electronics
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CompuGroup and LGLG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and LG Electronics go up and down completely randomly.
Pair Corralation between CompuGroup Medical and LG Electronics
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to under-perform the LG Electronics. In addition to that, CompuGroup Medical is 1.49 times more volatile than LG Electronics. It trades about -0.08 of its total potential returns per unit of risk. LG Electronics is currently generating about -0.01 per unit of volatility. If you would invest 1,520 in LG Electronics on September 4, 2024 and sell it today you would lose (140.00) from holding LG Electronics or give up 9.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical SE vs. LG Electronics
Performance |
| Timeline |
| CompuGroup Medical |
| LG Electronics |
CompuGroup Medical and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and LG Electronics
The main advantage of trading using opposite CompuGroup Medical and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| CompuGroup Medical vs. ZURICH INSURANCE GROUP | CompuGroup Medical vs. LION ONE METALS | CompuGroup Medical vs. Singapore Reinsurance | CompuGroup Medical vs. REVO INSURANCE SPA |
| LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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