Correlation Between SENECA FOODS-A and CompuGroup Medical

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

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

Diversification Opportunities for SENECA FOODS-A and CompuGroup Medical

0.84

Correlation Coefficient

SENECA FOODS-A  CompuGroup Medical

Very poor diversification

The 3 months correlation between SENECA and CompuGroup is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and SENECA FOODS-A 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 SENECA FOODS A 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 SENECA FOODS-A i.e., SENECA FOODS-A and CompuGroup Medical go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and CompuGroup Medical

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 0.61 times more return on investment than CompuGroup Medical. However, SENECA FOODS A is 1.64 times less risky than CompuGroup Medical. It trades about 0.1 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about -0.02 per unit of risk. If you would invest  4,460  in SENECA FOODS A on October 5, 2024 and sell it today you would earn a total of  2,940  from holding SENECA FOODS A or generate 65.92% return on investment over 90 days.

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

SENECA FOODS A  vs.  CompuGroup Medical SE

SENECA FOODS A

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days SENECA FOODS A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of comparatively unsteady basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SENECA FOODS-A and CompuGroup Medical

The main advantage of trading using opposite SENECA FOODS-A and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A 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 SENECA FOODS A 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.