Correlation Between Eco Animal and CompuGroup Medical

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

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

Diversification Opportunities for Eco Animal and CompuGroup Medical

-0.13

Correlation Coefficient

Eco Animal  CompuGroup Medical

Good diversification

The 3 months correlation between Eco and CompuGroup is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eco Animal Health and CompuGroup Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Eco Animal 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 Eco Animal Health 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 Eco Animal i.e., Eco Animal and CompuGroup Medical go up and down completely randomly.

Pair Corralation between Eco Animal and CompuGroup Medical

Assuming the 90 days trading horizon Eco Animal Health is expected to under-perform the CompuGroup Medical. In addition to that, Eco Animal is 1.68 times more volatile than CompuGroup Medical AG. It trades about -0.14 of its total potential returns per unit of risk. CompuGroup Medical AG is currently generating about 0.1 per unit of volatility. If you would invest  1,463  in CompuGroup Medical AG on September 4, 2024 and sell it today you would earn a total of  217.00  from holding CompuGroup Medical AG or generate 14.83% return on investment over 90 days.

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

Eco Animal Health  vs.  CompuGroup Medical AG

Eco Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CompuGroup Medical

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eco Animal and CompuGroup Medical

The main advantage of trading using opposite Eco Animal and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Animal 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 Eco Animal Health and CompuGroup Medical AG 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..