Correlation Between Mount Gibson and Compugroup Medical

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Can any of the company-specific risk be diversified away by investing in both Mount Gibson 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 Mount Gibson and Compugroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Compugroup Medical SE, you can compare the effects of market volatilities on Mount Gibson 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 Mount Gibson with a short position of Compugroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Compugroup Medical.

Diversification Opportunities for Mount Gibson and Compugroup Medical

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Mount and Compugroup is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and Mount Gibson 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 Mount Gibson Iron 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 Mount Gibson i.e., Mount Gibson and Compugroup Medical go up and down completely randomly.

Pair Corralation between Mount Gibson and Compugroup Medical

Assuming the 90 days horizon Mount Gibson Iron is expected to under-perform the Compugroup Medical. In addition to that, Mount Gibson is 4.28 times more volatile than Compugroup Medical SE. It trades about -0.1 of its total potential returns per unit of risk. Compugroup Medical SE is currently generating about 0.11 per unit of volatility. If you would invest  2,158  in Compugroup Medical SE on October 8, 2024 and sell it today you would earn a total of  26.00  from holding Compugroup Medical SE or generate 1.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mount Gibson Iron  vs.  Compugroup Medical SE

 Performance 
       Timeline  
Mount Gibson Iron 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mount Gibson Iron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mount Gibson is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
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. Despite nearly fragile basic indicators, Compugroup Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Mount Gibson and Compugroup Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mount Gibson and Compugroup Medical

The main advantage of trading using opposite Mount Gibson and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson 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 Mount Gibson Iron 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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