Correlation Between Compugroup Medical and Equity Residential

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

Diversification Opportunities for Compugroup Medical and Equity Residential

-0.72

Correlation Coefficient

Compugroup Medical  Equity Residential

Pay attention - limited upside

The 3 months correlation between Compugroup and Equity is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and Equity Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Residential 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 Equity Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Residential has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and Equity Residential go up and down completely randomly.

Pair Corralation between Compugroup Medical and Equity Residential

Assuming the 90 days horizon Compugroup Medical SE is expected to generate 0.67 times more return on investment than Equity Residential. However, Compugroup Medical SE is 1.5 times less risky than Equity Residential. It trades about 0.17 of its potential returns per unit of risk. Equity Residential is currently generating about -0.03 per unit of risk. If you would invest  2,085  in Compugroup Medical SE on April 20, 2025 and sell it today you would earn a total of  145.00  from holding Compugroup Medical SE or generate 6.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	74.6%
Values	Daily Returns

Compugroup Medical SE  vs.  Equity Residential

Compugroup Medical

Risk-Adjusted Performance

Good

Over the last 90 days Compugroup Medical SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Compugroup Medical may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Equity Residential

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Compugroup Medical and Equity Residential

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

The idea behind Compugroup Medical SE and Equity Residential 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.