Correlation Between Computer Age and Industrial Investment
Can any of the company-specific risk be diversified away by investing in both Computer Age and Industrial Investment 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 Industrial Investment 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 Industrial Investment Trust, you can compare the effects of market volatilities on Computer Age and Industrial Investment 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 Industrial Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Age and Industrial Investment.
Diversification Opportunities for Computer Age and Industrial Investment
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Computer and Industrial is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment 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 Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Computer Age i.e., Computer Age and Industrial Investment go up and down completely randomly.
Pair Corralation between Computer Age and Industrial Investment
Assuming the 90 days trading horizon Computer Age Management is expected to under-perform the Industrial Investment. In addition to that, Computer Age is 1.45 times more volatile than Industrial Investment Trust. It trades about -0.4 of its total potential returns per unit of risk. Industrial Investment Trust is currently generating about 0.42 per unit of volatility. If you would invest 32,400 in Industrial Investment Trust on November 7, 2024 and sell it today you would earn a total of 7,400 from holding Industrial Investment Trust or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Computer Age Management vs. Industrial Investment Trust
Performance |
| Timeline |
| Computer Age Management |
| Industrial Investment |
Computer Age and Industrial Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Age and Industrial Investment
The main advantage of trading using opposite Computer Age and Industrial Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Age position performs unexpectedly, Industrial Investment 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 Industrial Investment will offset losses from the drop in Industrial Investment's long position.| Computer Age vs. Patanjali Foods Limited | Computer Age vs. Univa Foods Limited | Computer Age vs. General Insurance | Computer Age vs. Megastar Foods Limited |
| Industrial Investment vs. Silgo Retail Limited | Industrial Investment vs. Mask Investments Limited | Industrial Investment vs. GM Breweries Limited | Industrial Investment vs. Golden Tobacco 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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