Correlation Between Food Life and CompuGroup Medical

Can any of the company-specific risk be diversified away by investing in both Food Life 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 Food Life and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Food Life Companies and CompuGroup Medical SE, you can compare the effects of market volatilities on Food Life 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 Food Life with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and CompuGroup Medical.

Diversification Opportunities for Food Life and CompuGroup Medical

0.35

Correlation Coefficient

Food Life  CompuGroup Medical

Weak diversification

The 3 months correlation between Food and CompuGroup is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Food Life 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 Food Life Companies 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 Food Life i.e., Food Life and CompuGroup Medical go up and down completely randomly.

Pair Corralation between Food Life and CompuGroup Medical

Assuming the 90 days horizon Food Life Companies is expected to generate 3.29 times more return on investment than CompuGroup Medical. However, Food Life is 3.29 times more volatile than CompuGroup Medical SE. It trades about 0.19 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about 0.08 per unit of risk. If you would invest  2,000  in Food Life Companies on December 29, 2024 and sell it today you would earn a total of  760.00  from holding Food Life Companies or generate 38.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Food Life Companies  vs.  CompuGroup Medical SE

Food Life Companies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Food Life Companies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Food Life reported solid returns over the last few months and may actually be approaching a breakup point.

CompuGroup Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CompuGroup Medical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Food Life and CompuGroup Medical

The main advantage of trading using opposite Food Life and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life 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 Food Life Companies 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.