Correlation Between Compugroup Medical and Companhia

Can any of the company-specific risk be diversified away by investing in both Compugroup Medical and Companhia 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 Companhia 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 Companhia de Saneamento, you can compare the effects of market volatilities on Compugroup Medical and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugroup Medical and Companhia.

Diversification Opportunities for Compugroup Medical and Companhia

-0.53

Correlation Coefficient

Compugroup Medical  Companhia

Excellent diversification

The 3 months correlation between Compugroup and Companhia is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and Companhia go up and down completely randomly.

Pair Corralation between Compugroup Medical and Companhia

Assuming the 90 days horizon Compugroup Medical SE is expected to under-perform the Companhia. In addition to that, Compugroup Medical is 1.96 times more volatile than Companhia de Saneamento. It trades about -0.01 of its total potential returns per unit of risk. Companhia de Saneamento is currently generating about -0.01 per unit of volatility. If you would invest  1,480  in Companhia de Saneamento on September 24, 2024 and sell it today you would lose (120.00) from holding Companhia de Saneamento or give up 8.11% of portfolio value over 90 days.

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

Compugroup Medical SE  vs.  Companhia de Saneamento

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.

Companhia de Saneamento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia de Saneamento has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking 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 Companhia

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

The idea behind Compugroup Medical SE and Companhia de Saneamento 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.