Correlation Between United Airlines and Compugroup Medical
Can any of the company-specific risk be diversified away by investing in both United Airlines 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 United Airlines and Compugroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Compugroup Medical SE, you can compare the effects of market volatilities on United Airlines 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 United Airlines with a short position of Compugroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Compugroup Medical.
Diversification Opportunities for United Airlines and Compugroup Medical
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Compugroup is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and United Airlines 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 United Airlines Holdings 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 United Airlines i.e., United Airlines and Compugroup Medical go up and down completely randomly.
Pair Corralation between United Airlines and Compugroup Medical
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.33 times more return on investment than Compugroup Medical. However, United Airlines is 1.33 times more volatile than Compugroup Medical SE. It trades about 0.37 of its potential returns per unit of risk. Compugroup Medical SE is currently generating about 0.0 per unit of risk. If you would invest 7,001 in United Airlines Holdings on August 26, 2024 and sell it today you would earn a total of 1,983 from holding United Airlines Holdings or generate 28.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Compugroup Medical SE
Performance |
| Timeline |
| United Airlines Holdings |
| Compugroup Medical |
United Airlines and Compugroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Compugroup Medical
The main advantage of trading using opposite United Airlines and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines 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.The idea behind United Airlines Holdings and Compugroup Medical SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Compugroup Medical vs. Evolent Health | Compugroup Medical vs. Superior Plus Corp | Compugroup Medical vs. NMI Holdings | Compugroup Medical vs. Origin Agritech |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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