Correlation Between Compugroup Medical and SPORTING

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

Diversification Opportunities for Compugroup Medical and SPORTING

0.05

Correlation Coefficient

Compugroup Medical  SPORTING

Significant diversification

The 3 months correlation between Compugroup and SPORTING is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and SPORTING go up and down completely randomly.

Pair Corralation between Compugroup Medical and SPORTING

Assuming the 90 days horizon Compugroup Medical is expected to generate 2.6 times less return on investment than SPORTING. In addition to that, Compugroup Medical is 1.12 times more volatile than SPORTING. It trades about 0.06 of its total potential returns per unit of risk. SPORTING is currently generating about 0.19 per unit of volatility. If you would invest  82.00  in SPORTING on September 5, 2024 and sell it today you would earn a total of  24.00  from holding SPORTING or generate 29.27% return on investment over 90 days.

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

Compugroup Medical SE  vs.  SPORTING

Compugroup Medical

Risk-Adjusted Performance

5 of 100

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 uncertain basic indicators, Compugroup Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPORTING

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPORTING are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, SPORTING unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compugroup Medical and SPORTING

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

The idea behind Compugroup Medical SE and SPORTING 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.