Correlation Between KAR Auction and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both KAR Auction 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 KAR Auction and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and CompuGroup Medical SE, you can compare the effects of market volatilities on KAR Auction 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 KAR Auction with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and CompuGroup Medical.
Diversification Opportunities for KAR Auction and CompuGroup Medical
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KAR and CompuGroup is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and KAR Auction 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 KAR Auction Services 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 KAR Auction i.e., KAR Auction and CompuGroup Medical go up and down completely randomly.
Pair Corralation between KAR Auction and CompuGroup Medical
Assuming the 90 days horizon KAR Auction Services is expected to generate 0.8 times more return on investment than CompuGroup Medical. However, KAR Auction Services is 1.25 times less risky than CompuGroup Medical. It trades about 0.05 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 1,260 in KAR Auction Services on August 30, 2024 and sell it today you would earn a total of 620.00 from holding KAR Auction Services or generate 49.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. CompuGroup Medical SE
Performance |
| Timeline |
| KAR Auction Services |
| CompuGroup Medical |
KAR Auction and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and CompuGroup Medical
The main advantage of trading using opposite KAR Auction and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction 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.| KAR Auction vs. CompuGroup Medical SE | KAR Auction vs. Apollo Medical Holdings | KAR Auction vs. Ross Stores | KAR Auction vs. Diamyd Medical AB |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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