Correlation Between Premier Foods and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Premier Foods 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 Premier Foods and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods PLC and CompuGroup Medical AG, you can compare the effects of market volatilities on Premier Foods 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 Premier Foods with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and CompuGroup Medical.
Diversification Opportunities for Premier Foods and CompuGroup Medical
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and CompuGroup is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and CompuGroup Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Premier Foods 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 Premier Foods PLC 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 Premier Foods i.e., Premier Foods and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Premier Foods and CompuGroup Medical
Assuming the 90 days trading horizon Premier Foods is expected to generate 3.71 times less return on investment than CompuGroup Medical. But when comparing it to its historical volatility, Premier Foods PLC is 20.88 times less risky than CompuGroup Medical. It trades about 0.06 of its potential returns per unit of risk. CompuGroup Medical AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,325 in CompuGroup Medical AG on November 28, 2024 and sell it today you would lose (703.00) from holding CompuGroup Medical AG or give up 30.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Premier Foods PLC vs. CompuGroup Medical AG
Performance |
| Timeline |
| Premier Foods PLC |
| CompuGroup Medical |
Premier Foods and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and CompuGroup Medical
The main advantage of trading using opposite Premier Foods and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods 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.| Premier Foods vs. Porvair plc | Premier Foods vs. Alfa Financial Software | Premier Foods vs. Bytes Technology | Premier Foods vs. Tata Steel Limited |
| CompuGroup Medical vs. Leroy Seafood Group | CompuGroup Medical vs. Supermarket Income REIT | CompuGroup Medical vs. Scandinavian Tobacco Group | CompuGroup Medical vs. National Beverage Corp |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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