Correlation Between Compugroup Medical and Sabra Health

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

Diversification Opportunities for Compugroup Medical and Sabra Health

-0.13

Correlation Coefficient

Compugroup Medical  Sabra Health

Good diversification

The 3 months correlation between Compugroup and Sabra is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and Sabra Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabra Health Care 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 Sabra Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabra Health Care has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and Sabra Health go up and down completely randomly.

Pair Corralation between Compugroup Medical and Sabra Health

Assuming the 90 days horizon Compugroup Medical SE is expected to under-perform the Sabra Health. In addition to that, Compugroup Medical is 1.79 times more volatile than Sabra Health Care. It trades about -0.02 of its total potential returns per unit of risk. Sabra Health Care is currently generating about 0.06 per unit of volatility. If you would invest  1,017  in Sabra Health Care on September 26, 2024 and sell it today you would earn a total of  593.00  from holding Sabra Health Care or generate 58.31% return on investment over 90 days.

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

Compugroup Medical SE  vs.  Sabra Health Care

Compugroup Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compugroup Medical SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Compugroup Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Sabra Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Compugroup Medical and Sabra Health

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

The idea behind Compugroup Medical SE and Sabra Health Care 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.