Correlation Between CompuGroup Medical and SMA Solar
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on CompuGroup Medical and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and SMA Solar.
Diversification Opportunities for CompuGroup Medical and SMA Solar
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between CompuGroup and SMA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and SMA Solar go up and down completely randomly.
Pair Corralation between CompuGroup Medical and SMA Solar
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 0.77 times more return on investment than SMA Solar. However, CompuGroup Medical SE is 1.29 times less risky than SMA Solar. It trades about -0.03 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.06 per unit of risk. If you would invest 4,039 in CompuGroup Medical SE on October 12, 2024 and sell it today you would lose (1,845) from holding CompuGroup Medical SE or give up 45.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical SE vs. SMA Solar Technology
Performance |
| Timeline |
| CompuGroup Medical |
| SMA Solar Technology |
CompuGroup Medical and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and SMA Solar
The main advantage of trading using opposite CompuGroup Medical and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| CompuGroup Medical vs. HOCHSCHILD MINING | CompuGroup Medical vs. Molson Coors Beverage | CompuGroup Medical vs. The Boston Beer | CompuGroup Medical vs. Media and Games |
| SMA Solar vs. DATAGROUP SE | SMA Solar vs. NTT DATA | SMA Solar vs. IMAGIN MEDICAL INC | SMA Solar 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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