Correlation Between Computer Age and Cambridge Technology
Can any of the company-specific risk be diversified away by investing in both Computer Age and Cambridge Technology 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 Computer Age and Cambridge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer Age Management and Cambridge Technology Enterprises, you can compare the effects of market volatilities on Computer Age and Cambridge Technology 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 Computer Age with a short position of Cambridge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Age and Cambridge Technology.
Diversification Opportunities for Computer Age and Cambridge Technology
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Computer and Cambridge is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology and Computer Age 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 Computer Age Management are associated (or correlated) with Cambridge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Technology has no effect on the direction of Computer Age i.e., Computer Age and Cambridge Technology go up and down completely randomly.
Pair Corralation between Computer Age and Cambridge Technology
Assuming the 90 days trading horizon Computer Age Management is expected to generate 0.85 times more return on investment than Cambridge Technology. However, Computer Age Management is 1.18 times less risky than Cambridge Technology. It trades about -0.01 of its potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about -0.25 per unit of risk. If you would invest 448,660 in Computer Age Management on August 25, 2024 and sell it today you would lose (3,725) from holding Computer Age Management or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer Age Management vs. Cambridge Technology Enterpris
Performance |
| Timeline |
| Computer Age Management |
| Cambridge Technology |
Computer Age and Cambridge Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Age and Cambridge Technology
The main advantage of trading using opposite Computer Age and Cambridge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Age position performs unexpectedly, Cambridge Technology 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 Cambridge Technology will offset losses from the drop in Cambridge Technology's long position.| Computer Age vs. Divis Laboratories Limited | Computer Age vs. Indo Borax Chemicals | Computer Age vs. Kingfa Science Technology | Computer Age vs. Alkali Metals Limited |
| Cambridge Technology vs. Divis Laboratories Limited | Cambridge Technology vs. Indo Borax Chemicals | Cambridge Technology vs. Kingfa Science Technology | Cambridge Technology vs. Alkali Metals Limited |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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