Correlation Between CompuGroup Medical and Tianjin Capital

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

Diversification Opportunities for CompuGroup Medical and Tianjin Capital

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between CompuGroup and Tianjin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and Tianjin Capital go up and down completely randomly.

Pair Corralation between CompuGroup Medical and Tianjin Capital

Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 1.47 times more return on investment than Tianjin Capital. However, CompuGroup Medical is 1.47 times more volatile than Tianjin Capital Environmental. It trades about 0.17 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.11 per unit of risk. If you would invest  1,409  in CompuGroup Medical SE on September 13, 2024 and sell it today you would earn a total of  777.00  from holding CompuGroup Medical SE or generate 55.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

CompuGroup Medical SE  vs.  Tianjin Capital Environmental

 Performance 
       Timeline  
CompuGroup Medical 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
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.
Tianjin Capital Envi 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Tianjin Capital reported solid returns over the last few months and may actually be approaching a breakup point.

CompuGroup Medical and Tianjin Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CompuGroup Medical and Tianjin Capital

The main advantage of trading using opposite CompuGroup Medical and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, Tianjin Capital 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 Tianjin Capital will offset losses from the drop in Tianjin Capital's long position.
The idea behind CompuGroup Medical SE and Tianjin Capital Environmental 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.
Check out your portfolio center.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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