Correlation Between CompuGroup Medical and CHINA STATE

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

Diversification Opportunities for CompuGroup Medical and CHINA STATE

-0.59

Correlation Coefficient

CompuGroup Medical  CHINA STATE

Excellent diversification

The 3 months correlation between CompuGroup and CHINA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and CHINA STATE STRU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA STATE STRU 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 CHINA STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA STATE STRU has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and CHINA STATE go up and down completely randomly.

Pair Corralation between CompuGroup Medical and CHINA STATE

Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 11.52 times more return on investment than CHINA STATE. However, CompuGroup Medical is 11.52 times more volatile than CHINA STATE STRU. It trades about 0.19 of its potential returns per unit of risk. CHINA STATE STRU is currently generating about -0.12 per unit of risk. If you would invest  1,530  in CompuGroup Medical SE on October 11, 2024 and sell it today you would earn a total of  670.00  from holding CompuGroup Medical SE or generate 43.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.44%
Values	Daily Returns

CompuGroup Medical SE  vs.  CHINA STATE STRU

CompuGroup Medical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

CHINA STATE STRU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA STATE STRU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CompuGroup Medical and CHINA STATE

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

The idea behind CompuGroup Medical SE and CHINA STATE STRU 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.