Correlation Between BC IRON and Compugroup Medical

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

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

Diversification Opportunities for BC IRON and Compugroup Medical

-0.83

Correlation Coefficient

BC IRON  Compugroup Medical

Pay attention - limited upside

The 3 months correlation between BC3 and Compugroup is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and BC IRON 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 BC IRON 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 BC IRON i.e., BC IRON and Compugroup Medical go up and down completely randomly.

Pair Corralation between BC IRON and Compugroup Medical

Assuming the 90 days trading horizon BC IRON is expected to generate 4.35 times more return on investment than Compugroup Medical. However, BC IRON is 4.35 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 0.23 per unit of risk. If you would invest  15.00  in BC IRON on October 23, 2024 and sell it today you would earn a total of  2.00  from holding BC IRON or generate 13.33% return on investment over 90 days.

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

BC IRON  vs.  Compugroup Medical SE

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BC IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BC IRON is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 unsteady basic indicators, Compugroup Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BC IRON and Compugroup Medical

The main advantage of trading using opposite BC IRON and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC IRON 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 BC IRON 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.