Correlation Between Compugroup Medical and NAKED WINES

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

Diversification Opportunities for Compugroup Medical and NAKED WINES

0.24

Correlation Coefficient

Compugroup Medical  NAKED WINES

Modest diversification

The 3 months correlation between Compugroup and NAKED is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC 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 NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and NAKED WINES go up and down completely randomly.

Pair Corralation between Compugroup Medical and NAKED WINES

Assuming the 90 days horizon Compugroup Medical is expected to generate 16.76 times less return on investment than NAKED WINES. But when comparing it to its historical volatility, Compugroup Medical SE is 7.31 times less risky than NAKED WINES. It trades about 0.08 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  56.00  in NAKED WINES PLC on December 30, 2024 and sell it today you would earn a total of  49.00  from holding NAKED WINES PLC or generate 87.5% 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.  NAKED WINES PLC

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. 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.

NAKED WINES PLC

Risk-Adjusted Performance

Good

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

Pair Trading with Compugroup Medical and NAKED WINES

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

The idea behind Compugroup Medical SE and NAKED WINES PLC 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 Stocks Directory module to find actively traded stocks across global markets.