Correlation Between Ribbon Communications and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Ribbon Communications 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 Ribbon Communications and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ribbon Communications and CompuGroup Medical SE, you can compare the effects of market volatilities on Ribbon Communications 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 Ribbon Communications with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ribbon Communications and CompuGroup Medical.
Diversification Opportunities for Ribbon Communications and CompuGroup Medical
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ribbon and CompuGroup is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ribbon Communications and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Ribbon Communications 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 Ribbon Communications 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 Ribbon Communications i.e., Ribbon Communications and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Ribbon Communications and CompuGroup Medical
Assuming the 90 days trading horizon Ribbon Communications is expected to generate 7.52 times less return on investment than CompuGroup Medical. But when comparing it to its historical volatility, Ribbon Communications is 3.53 times less risky than CompuGroup Medical. It trades about 0.13 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,428 in CompuGroup Medical SE on September 15, 2024 and sell it today you would earn a total of 726.00 from holding CompuGroup Medical SE or generate 50.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ribbon Communications vs. CompuGroup Medical SE
Performance |
| Timeline |
| Ribbon Communications |
| CompuGroup Medical |
Ribbon Communications and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ribbon Communications and CompuGroup Medical
The main advantage of trading using opposite Ribbon Communications and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ribbon Communications 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.| Ribbon Communications vs. Superior Plus Corp | Ribbon Communications vs. SIVERS SEMICONDUCTORS AB | Ribbon Communications vs. Norsk Hydro ASA | Ribbon Communications vs. Reliance Steel Aluminum |
| CompuGroup Medical vs. American Airlines Group | CompuGroup Medical vs. United Internet AG | CompuGroup Medical vs. International Consolidated Airlines | CompuGroup Medical vs. Ribbon Communications |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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