Correlation Between CompuGroup Medical and SECOM
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and SECOM 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 SECOM 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 SECOM LTD, you can compare the effects of market volatilities on CompuGroup Medical and SECOM 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 SECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and SECOM.
Diversification Opportunities for CompuGroup Medical and SECOM
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CompuGroup and SECOM is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and SECOM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECOM LTD 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 SECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECOM LTD has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and SECOM go up and down completely randomly.
Pair Corralation between CompuGroup Medical and SECOM
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 0.68 times more return on investment than SECOM. However, CompuGroup Medical SE is 1.46 times less risky than SECOM. It trades about 0.26 of its potential returns per unit of risk. SECOM LTD is currently generating about -0.06 per unit of risk. If you would invest 2,204 in CompuGroup Medical SE on November 7, 2024 and sell it today you would earn a total of 106.00 from holding CompuGroup Medical SE or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
CompuGroup Medical SE vs. SECOM LTD
Performance |
| Timeline |
| CompuGroup Medical |
| SECOM LTD |
CompuGroup Medical and SECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and SECOM
The main advantage of trading using opposite CompuGroup Medical and SECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, SECOM 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 SECOM will offset losses from the drop in SECOM's long position.| CompuGroup Medical vs. Canadian Utilities Limited | CompuGroup Medical vs. The Home Depot | CompuGroup Medical vs. bet at home AG | CompuGroup Medical vs. Eidesvik Offshore ASA |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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