Correlation Between Compugroup Medical and OAKRIDGE INTERNATIONAL

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

Diversification Opportunities for Compugroup Medical and OAKRIDGE INTERNATIONAL

0.06

Correlation Coefficient

Compugroup Medical  OAKRIDGE INTERNATIONAL

Significant diversification

The 3 months correlation between Compugroup and OAKRIDGE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and OAKRIDGE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OAKRIDGE INTERNATIONAL 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 OAKRIDGE INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OAKRIDGE INTERNATIONAL has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and OAKRIDGE INTERNATIONAL go up and down completely randomly.

Pair Corralation between Compugroup Medical and OAKRIDGE INTERNATIONAL

Assuming the 90 days horizon Compugroup Medical SE is expected to under-perform the OAKRIDGE INTERNATIONAL. But the stock apears to be less risky and, when comparing its historical volatility, Compugroup Medical SE is 4.25 times less risky than OAKRIDGE INTERNATIONAL. The stock trades about -0.03 of its potential returns per unit of risk. The OAKRIDGE INTERNATIONAL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.30  in OAKRIDGE INTERNATIONAL on October 5, 2024 and sell it today you would lose (2.00) from holding OAKRIDGE INTERNATIONAL or give up 37.74% of portfolio value over 90 days.

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

Compugroup Medical SE  vs.  OAKRIDGE INTERNATIONAL

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.

OAKRIDGE INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with Compugroup Medical and OAKRIDGE INTERNATIONAL

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

The idea behind Compugroup Medical SE and OAKRIDGE INTERNATIONAL 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.