Correlation Between CompuGroup Medical and PENN NATL

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

Diversification Opportunities for CompuGroup Medical and PENN NATL

0.19

Correlation Coefficient

CompuGroup Medical  PENN NATL

Average diversification

The 3 months correlation between CompuGroup and PENN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and PENN NATL go up and down completely randomly.

Pair Corralation between CompuGroup Medical and PENN NATL

Assuming the 90 days trading horizon CompuGroup Medical SE is expected to under-perform the PENN NATL. But the stock apears to be less risky and, when comparing its historical volatility, CompuGroup Medical SE is 1.08 times less risky than PENN NATL. The stock trades about -0.02 of its potential returns per unit of risk. The PENN NATL GAMING is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,909  in PENN NATL GAMING on October 11, 2024 and sell it today you would lose (1,083) from holding PENN NATL GAMING or give up 37.23% 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.  PENN NATL GAMING

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.

PENN NATL GAMING

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PENN NATL GAMING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, PENN NATL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CompuGroup Medical and PENN NATL

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

The idea behind CompuGroup Medical SE and PENN NATL GAMING 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 Valuation module to check real value of public entities based on technical and fundamental data.