Correlation Between Ensign and Compugroup Medical

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

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

Diversification Opportunities for Ensign and Compugroup Medical

-0.6

Correlation Coefficient

Ensign  Compugroup Medical

Excellent diversification

The 3 months correlation between Ensign and Compugroup is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical and Ensign 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 The Ensign Group 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 Ensign i.e., Ensign and Compugroup Medical go up and down completely randomly.

Pair Corralation between Ensign and Compugroup Medical

Assuming the 90 days horizon The Ensign Group is expected to generate 0.73 times more return on investment than Compugroup Medical. However, The Ensign Group is 1.37 times less risky than Compugroup Medical. It trades about -0.07 of its potential returns per unit of risk. Compugroup Medical SE is currently generating about -0.18 per unit of risk. If you would invest  11,000  in The Ensign Group on February 7, 2024 and sell it today you would lose (200.00) from holding The Ensign Group or give up 1.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

The Ensign Group  vs.  Compugroup Medical SE

Ensign Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Ensign Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ensign is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Compugroup Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ensign and Compugroup Medical

The main advantage of trading using opposite Ensign and Compugroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign 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 The Ensign Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.