Correlation Between CompuGroup Medical and Omnicom

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

Diversification Opportunities for CompuGroup Medical and Omnicom

-0.7

Correlation Coefficient

CompuGroup Medical  Omnicom

Excellent diversification

The 3 months correlation between CompuGroup and Omnicom is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group 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 Omnicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnicom Group has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and Omnicom go up and down completely randomly.

Pair Corralation between CompuGroup Medical and Omnicom

Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 2.93 times more return on investment than Omnicom. However, CompuGroup Medical is 2.93 times more volatile than Omnicom Group. It trades about 0.22 of its potential returns per unit of risk. Omnicom Group is currently generating about -0.12 per unit of risk. If you would invest  1,404  in CompuGroup Medical SE on October 6, 2024 and sell it today you would earn a total of  786.00  from holding CompuGroup Medical SE or generate 55.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

CompuGroup Medical SE  vs.  Omnicom Group

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.

Omnicom Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omnicom Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CompuGroup Medical and Omnicom

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

The idea behind CompuGroup Medical SE and Omnicom Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.