Correlation Between WESTLAKE CHEMICAL and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and CompuGroup Medical SE, you can compare the effects of market volatilities on WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and CompuGroup Medical.
Diversification Opportunities for WESTLAKE CHEMICAL and CompuGroup Medical
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WESTLAKE and CompuGroup is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and CompuGroup Medical go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and CompuGroup Medical
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 0.67 times more return on investment than CompuGroup Medical. However, WESTLAKE CHEMICAL is 1.48 times less risky than CompuGroup Medical. It trades about 0.03 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about -0.05 per unit of risk. If you would invest 9,797 in WESTLAKE CHEMICAL on August 30, 2024 and sell it today you would earn a total of 2,303 from holding WESTLAKE CHEMICAL or generate 23.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. CompuGroup Medical SE
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| CompuGroup Medical |
WESTLAKE CHEMICAL and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and CompuGroup Medical
The main advantage of trading using opposite WESTLAKE CHEMICAL and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL 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.| WESTLAKE CHEMICAL vs. Suntory Beverage Food | WESTLAKE CHEMICAL vs. Lion One Metals | WESTLAKE CHEMICAL vs. Entravision Communications | WESTLAKE CHEMICAL vs. Harmony Gold Mining |
| CompuGroup Medical vs. OFFICE DEPOT | CompuGroup Medical vs. ULTRA CLEAN HLDGS | CompuGroup Medical vs. SALESFORCE INC CDR | CompuGroup Medical vs. Infrastrutture Wireless Italiane |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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