Correlation Between CompuGroup Medical and Kingfisher Plc

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

Diversification Opportunities for CompuGroup Medical and Kingfisher Plc

-0.76

Correlation Coefficient

CompuGroup Medical  Kingfisher Plc

Pay attention - limited upside

The 3 months correlation between CompuGroup and Kingfisher is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and Kingfisher plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher plc 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 Kingfisher Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher plc has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and Kingfisher Plc go up and down completely randomly.

Pair Corralation between CompuGroup Medical and Kingfisher Plc

Assuming the 90 days trading horizon CompuGroup Medical SE is expected to under-perform the Kingfisher Plc. In addition to that, CompuGroup Medical is 1.69 times more volatile than Kingfisher plc. It trades about -0.02 of its total potential returns per unit of risk. Kingfisher plc is currently generating about 0.02 per unit of volatility. If you would invest  277.00  in Kingfisher plc on October 4, 2024 and sell it today you would earn a total of  26.00  from holding Kingfisher plc or generate 9.39% return on investment over 90 days.

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

CompuGroup Medical SE  vs.  Kingfisher plc

CompuGroup Medical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical SE are ranked lower than 13 (%) 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.

Kingfisher plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingfisher plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CompuGroup Medical and Kingfisher Plc

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

The idea behind CompuGroup Medical SE and Kingfisher plc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.