Correlation Between Dairy Farm and Compugroup Medical
Can any of the company-specific risk be diversified away by investing in both Dairy Farm 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 Dairy Farm and Compugroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Compugroup Medical SE, you can compare the effects of market volatilities on Dairy Farm 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 Dairy Farm with a short position of Compugroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Compugroup Medical.
Diversification Opportunities for Dairy Farm and Compugroup Medical
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dairy and Compugroup is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and Dairy Farm 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 Dairy Farm International 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 Dairy Farm i.e., Dairy Farm and Compugroup Medical go up and down completely randomly.
Pair Corralation between Dairy Farm and Compugroup Medical
Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the Compugroup Medical. In addition to that, Dairy Farm is 3.2 times more volatile than Compugroup Medical SE. It trades about -0.06 of its total potential returns per unit of risk. Compugroup Medical SE is currently generating about 0.16 per unit of volatility. If you would invest 2,176 in Compugroup Medical SE on October 25, 2024 and sell it today you would earn a total of 30.00 from holding Compugroup Medical SE or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. Compugroup Medical SE
Performance |
| Timeline |
| Dairy Farm International |
| Compugroup Medical |
Dairy Farm and Compugroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Compugroup Medical
The main advantage of trading using opposite Dairy Farm and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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.| Dairy Farm vs. Highlight Communications AG | Dairy Farm vs. Entravision Communications | Dairy Farm vs. Charter Communications | Dairy Farm vs. MACOM Technology Solutions |
| Compugroup Medical vs. REINET INVESTMENTS SCA | Compugroup Medical vs. SEI INVESTMENTS | Compugroup Medical vs. PennantPark Investment | Compugroup Medical vs. G8 EDUCATION |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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