Correlation Between Fortescue Metals and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Fortescue 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 Fortescue 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 Fortescue Metals Group and CompuGroup Medical SE, you can compare the effects of market volatilities on Fortescue 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 Fortescue Metals with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and CompuGroup Medical.
Diversification Opportunities for Fortescue Metals and CompuGroup Medical
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortescue and CompuGroup is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Fortescue 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 Fortescue Metals Group 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 Fortescue Metals i.e., Fortescue Metals and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Fortescue Metals and CompuGroup Medical
Assuming the 90 days horizon Fortescue Metals Group is expected to under-perform the CompuGroup Medical. In addition to that, Fortescue Metals is 4.9 times more volatile than CompuGroup Medical SE. It trades about -0.09 of its total potential returns per unit of risk. CompuGroup Medical SE is currently generating about 0.1 per unit of volatility. If you would invest 2,160 in CompuGroup Medical SE on October 17, 2024 and sell it today you would earn a total of 14.00 from holding CompuGroup Medical SE or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. CompuGroup Medical SE
Performance |
| Timeline |
| Fortescue Metals |
| CompuGroup Medical |
Fortescue Metals and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and CompuGroup Medical
The main advantage of trading using opposite Fortescue Metals and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue 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.| Fortescue Metals vs. Medical Properties Trust | Fortescue Metals vs. Peijia Medical Limited | Fortescue Metals vs. Wyndham Hotels Resorts | Fortescue Metals vs. Summit Hotel Properties |
| CompuGroup Medical vs. ARDAGH METAL PACDL 0001 | CompuGroup Medical vs. Fortescue Metals Group | CompuGroup Medical vs. Urban Outfitters | CompuGroup Medical vs. OFFICE DEPOT |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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