Correlation Between Compugroup Medical and RLX TECH

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

By analyzing existing cross correlation between Compugroup Medical SE and RLX TECH SPADR1, you can compare the effects of market volatilities on Compugroup Medical and RLX TECH 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 Compugroup Medical with a short position of RLX TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugroup Medical and RLX TECH.

Diversification Opportunities for Compugroup Medical and RLX TECH

0.2

Correlation Coefficient

Compugroup Medical  RLX TECH

Modest diversification

The 3 months correlation between Compugroup and RLX is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and RLX TECH SPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX TECH SPADR1 and Compugroup Medical 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 Compugroup Medical SE are associated (or correlated) with RLX TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLX TECH SPADR1 has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and RLX TECH go up and down completely randomly.

Pair Corralation between Compugroup Medical and RLX TECH

Assuming the 90 days horizon Compugroup Medical SE is expected to generate 0.26 times more return on investment than RLX TECH. However, Compugroup Medical SE is 3.82 times less risky than RLX TECH. It trades about 0.08 of its potential returns per unit of risk. RLX TECH SPADR1 is currently generating about -0.03 per unit of risk. If you would invest  2,176  in Compugroup Medical SE on December 26, 2024 and sell it today you would earn a total of  86.00  from holding Compugroup Medical SE or generate 3.95% return on investment over 90 days.

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

Compugroup Medical SE  vs.  RLX TECH SPADR1

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 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Compugroup Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RLX TECH SPADR1

Risk-Adjusted Performance

Very Weak

Over the last 90 days RLX TECH SPADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RLX TECH is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Compugroup Medical and RLX TECH

The main advantage of trading using opposite Compugroup Medical and RLX TECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compugroup Medical position performs unexpectedly, RLX TECH 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 RLX TECH will offset losses from the drop in RLX TECH's long position.

The idea behind Compugroup Medical SE and RLX TECH SPADR1 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.