Correlation Between DAIRY FARM and Compugroup Medical

Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and Compugroup Medical 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 DAIRY FARM and Compugroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DAIRY FARM INTL and Compugroup Medical SE, you can compare the effects of market volatilities on DAIRY FARM and Compugroup Medical 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 DAIRY FARM with a short position of Compugroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Compugroup Medical.

Diversification Opportunities for DAIRY FARM and Compugroup Medical

0.29

Correlation Coefficient

DAIRY FARM  Compugroup Medical

Modest diversification

The 3 months correlation between DAIRY and Compugroup is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and DAIRY FARM 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 DAIRY FARM INTL are associated (or correlated) with Compugroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugroup Medical has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and Compugroup Medical go up and down completely randomly.

Pair Corralation between DAIRY FARM and Compugroup Medical

Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 0.72 times more return on investment than Compugroup Medical. However, DAIRY FARM INTL is 1.39 times less risky than Compugroup Medical. It trades about -0.01 of its potential returns per unit of risk. Compugroup Medical SE is currently generating about -0.04 per unit of risk. If you would invest  282.00  in DAIRY FARM INTL on October 5, 2024 and sell it today you would lose (64.00) from holding DAIRY FARM INTL or give up 22.7% of portfolio value over 90 days.

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

DAIRY FARM INTL  vs.  Compugroup Medical SE

DAIRY FARM INTL

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days DAIRY FARM INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, DAIRY FARM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. Despite nearly fragile basic indicators, Compugroup Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAIRY FARM and Compugroup Medical

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

The idea behind DAIRY FARM INTL and Compugroup Medical SE 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.