Correlation Between KRISPY KREME and Compugroup Medical

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and Compugroup Medical SE, you can compare the effects of market volatilities on KRISPY KREME 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 KRISPY KREME with a short position of Compugroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Compugroup Medical.

Diversification Opportunities for KRISPY KREME and Compugroup Medical

-0.81

Correlation Coefficient

KRISPY KREME  Compugroup Medical

Pay attention - limited upside

The 3 months correlation between KRISPY and Compugroup is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and KRISPY KREME 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 KRISPY KREME DL 01 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 KRISPY KREME i.e., KRISPY KREME and Compugroup Medical go up and down completely randomly.

Pair Corralation between KRISPY KREME and Compugroup Medical

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to generate 0.92 times more return on investment than Compugroup Medical. However, KRISPY KREME DL 01 is 1.09 times less risky than Compugroup Medical. It trades about 0.0 of its potential returns per unit of risk. Compugroup Medical SE is currently generating about -0.03 per unit of risk. If you would invest  1,035  in KRISPY KREME DL 01 on October 13, 2024 and sell it today you would lose (125.00) from holding KRISPY KREME DL 01 or give up 12.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

KRISPY KREME DL 01  vs.  Compugroup Medical SE

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Compugroup Medical

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with KRISPY KREME and Compugroup Medical

The main advantage of trading using opposite KRISPY KREME and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME 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 KRISPY KREME DL 01 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.

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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 Stocks Directory module to find actively traded stocks across global markets.