Correlation Between Cornish Metals and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Cornish Metals and CompuGroup Medical 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 Cornish Metals and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and CompuGroup Medical AG, you can compare the effects of market volatilities on Cornish Metals and CompuGroup Medical 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 Cornish Metals with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and CompuGroup Medical.
Diversification Opportunities for Cornish Metals and CompuGroup Medical
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cornish and CompuGroup is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and CompuGroup Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Cornish Metals 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 Cornish Metals are associated (or correlated) with CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of Cornish Metals i.e., Cornish Metals and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Cornish Metals and CompuGroup Medical
Assuming the 90 days trading horizon Cornish Metals is expected to generate 1.49 times more return on investment than CompuGroup Medical. However, Cornish Metals is 1.49 times more volatile than CompuGroup Medical AG. It trades about 0.0 of its potential returns per unit of risk. CompuGroup Medical AG is currently generating about -0.09 per unit of risk. If you would invest 1,125 in Cornish Metals on August 31, 2024 and sell it today you would lose (275.00) from holding Cornish Metals or give up 24.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. CompuGroup Medical AG
Performance |
| Timeline |
| Cornish Metals |
| CompuGroup Medical |
Cornish Metals and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and CompuGroup Medical
The main advantage of trading using opposite Cornish Metals and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.The idea behind Cornish Metals and CompuGroup Medical AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CompuGroup Medical vs. Neometals | CompuGroup Medical vs. Coor Service Management | CompuGroup Medical vs. Aeorema Communications Plc | CompuGroup Medical vs. JLEN Environmental Assets |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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