Correlation Between Penta Ocean and Compugroup Medical

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

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

Diversification Opportunities for Penta Ocean and Compugroup Medical

0.11

Correlation Coefficient

Penta Ocean  Compugroup Medical

Average diversification

The 3 months correlation between Penta and Compugroup is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and Penta Ocean 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 Penta Ocean Construction Co 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 Penta Ocean i.e., Penta Ocean and Compugroup Medical go up and down completely randomly.

Pair Corralation between Penta Ocean and Compugroup Medical

Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 0.54 times more return on investment than Compugroup Medical. However, Penta Ocean Construction Co is 1.87 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  438.00  in Penta Ocean Construction Co on October 5, 2024 and sell it today you would lose (46.00) from holding Penta Ocean Construction Co or give up 10.5% of portfolio value over 90 days.

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

Penta Ocean Construction Co  vs.  Compugroup Medical SE

Penta Ocean Construc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Penta Ocean Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Penta Ocean 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

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 Penta Ocean and Compugroup Medical

The main advantage of trading using opposite Penta Ocean and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta Ocean 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 Penta Ocean Construction Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.