Correlation Between Compugroup Medical and DAIRY FARM

Can any of the company-specific risk be diversified away by investing in both Compugroup Medical and DAIRY FARM 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 DAIRY FARM 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 DAIRY FARM INTL, you can compare the effects of market volatilities on Compugroup Medical and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugroup Medical and DAIRY FARM.

Diversification Opportunities for Compugroup Medical and DAIRY FARM

0.29

Correlation Coefficient

Compugroup Medical  DAIRY FARM

Modest diversification

The 3 months correlation between Compugroup and DAIRY is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and DAIRY FARM go up and down completely randomly.

Pair Corralation between Compugroup Medical and DAIRY FARM

Assuming the 90 days horizon Compugroup Medical SE is expected to under-perform the DAIRY FARM. In addition to that, Compugroup Medical is 1.37 times more volatile than DAIRY FARM INTL. It trades about -0.02 of its total potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.01 per unit of volatility. If you would invest  260.00  in DAIRY FARM INTL on October 5, 2024 and sell it today you would lose (42.00) from holding DAIRY FARM INTL or give up 16.15% of portfolio value over 90 days.

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

Compugroup Medical SE  vs.  DAIRY FARM INTL

Compugroup Medical

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Compugroup Medical SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Compugroup Medical reported solid returns over the last few months and may actually be approaching a breakup point.

DAIRY FARM INTL

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days DAIRY FARM INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, DAIRY FARM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Compugroup Medical and DAIRY FARM

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

The idea behind Compugroup Medical SE and DAIRY FARM INTL 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.