Correlation Between Sensient Technologies and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies 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 Sensient Technologies and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and CompuGroup Medical SE, you can compare the effects of market volatilities on Sensient Technologies 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 Sensient Technologies with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and CompuGroup Medical.
Diversification Opportunities for Sensient Technologies and CompuGroup Medical
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sensient and CompuGroup is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Sensient Technologies and CompuGroup Medical
Considering the 90-day investment horizon Sensient Technologies is expected to generate 0.43 times more return on investment than CompuGroup Medical. However, Sensient Technologies is 2.34 times less risky than CompuGroup Medical. It trades about 0.02 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about -0.02 per unit of risk. If you would invest 6,978 in Sensient Technologies on September 14, 2024 and sell it today you would earn a total of 692.00 from holding Sensient Technologies or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.26% |
| Values | Daily Returns |
Sensient Technologies vs. CompuGroup Medical SE
Performance |
| Timeline |
| Sensient Technologies |
| CompuGroup Medical |
Sensient Technologies and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and CompuGroup Medical
The main advantage of trading using opposite Sensient Technologies and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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.| Sensient Technologies vs. LyondellBasell Industries NV | Sensient Technologies vs. Cabot | Sensient Technologies vs. Westlake Chemical | Sensient Technologies vs. Air Products and |
| CompuGroup Medical vs. The Gap, | CompuGroup Medical vs. Sea | CompuGroup Medical vs. NL Industries | CompuGroup Medical vs. Sensient Technologies |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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