Correlation Between CompuGroup Medical and ImagineAR

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

Diversification Opportunities for CompuGroup Medical and ImagineAR

-0.53

Correlation Coefficient

CompuGroup Medical  ImagineAR

Excellent diversification

The 3 months correlation between CompuGroup and ImagineAR is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR 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 ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and ImagineAR go up and down completely randomly.

Pair Corralation between CompuGroup Medical and ImagineAR

Assuming the 90 days trading horizon CompuGroup Medical SE is expected to under-perform the ImagineAR. But the stock apears to be less risky and, when comparing its historical volatility, CompuGroup Medical SE is 2.34 times less risky than ImagineAR. The stock trades about -0.02 of its potential returns per unit of risk. The ImagineAR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5.20  in ImagineAR on October 5, 2024 and sell it today you would lose (1.20) from holding ImagineAR or give up 23.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

CompuGroup Medical SE  vs.  ImagineAR

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. In spite of comparatively unsteady basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

ImagineAR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ImagineAR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ImagineAR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CompuGroup Medical and ImagineAR

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

The idea behind CompuGroup Medical SE and ImagineAR 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.