Correlation Between Penn National and Compugroup Medical

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

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

Diversification Opportunities for Penn National and Compugroup Medical

0.07

Correlation Coefficient

Penn National  Compugroup Medical

Significant diversification

The 3 months correlation between Penn and Compugroup is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and Penn National 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 Penn National Gaming 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 Penn National i.e., Penn National and Compugroup Medical go up and down completely randomly.

Pair Corralation between Penn National and Compugroup Medical

Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Compugroup Medical. In addition to that, Penn National is 3.61 times more volatile than Compugroup Medical SE. It trades about -0.03 of its total potential returns per unit of risk. Compugroup Medical SE is currently generating about 0.08 per unit of volatility. If you would invest  2,170  in Compugroup Medical SE on December 29, 2024 and sell it today you would earn a total of  94.00  from holding Compugroup Medical SE or generate 4.33% return on investment over 90 days.

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

Penn National Gaming  vs.  Compugroup Medical SE

Penn National Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penn National Gaming 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.

Compugroup Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compugroup Medical SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Compugroup Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Penn National and Compugroup Medical

The main advantage of trading using opposite Penn National and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National 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 Penn National Gaming 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.