Correlation Between Compugroup Medical and PT Ace

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

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

Diversification Opportunities for Compugroup Medical and PT Ace

-0.4

Correlation Coefficient

Compugroup Medical  PT Ace

Very good diversification

The 3 months correlation between Compugroup and 4AH1 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and PT Ace Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Ace Hardware and Compugroup Medical 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 Compugroup Medical SE are associated (or correlated) with PT Ace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Ace Hardware has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and PT Ace go up and down completely randomly.

Pair Corralation between Compugroup Medical and PT Ace

Assuming the 90 days horizon Compugroup Medical SE is expected to generate 1.08 times more return on investment than PT Ace. However, Compugroup Medical is 1.08 times more volatile than PT Ace Hardware. It trades about 0.25 of its potential returns per unit of risk. PT Ace Hardware is currently generating about 0.03 per unit of risk. If you would invest  1,504  in Compugroup Medical SE on September 24, 2024 and sell it today you would earn a total of  654.00  from holding Compugroup Medical SE or generate 43.48% return on investment over 90 days.

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

Compugroup Medical SE  vs.  PT Ace Hardware

Compugroup Medical

Risk-Adjusted Performance

13 of 100

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.

PT Ace Hardware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Ace Hardware has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Compugroup Medical and PT Ace

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

The idea behind Compugroup Medical SE and PT Ace Hardware 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.