Correlation Between Computer Direct and Inrom Construction
Can any of the company-specific risk be diversified away by investing in both Computer Direct and Inrom Construction 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 Direct and Inrom Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer Direct and Inrom Construction Industries, you can compare the effects of market volatilities on Computer Direct and Inrom Construction 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 Direct with a short position of Inrom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Direct and Inrom Construction.
Diversification Opportunities for Computer Direct and Inrom Construction
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Computer and Inrom is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Computer Direct and Inrom Construction Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inrom Construction and Computer Direct 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 Direct are associated (or correlated) with Inrom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inrom Construction has no effect on the direction of Computer Direct i.e., Computer Direct and Inrom Construction go up and down completely randomly.
Pair Corralation between Computer Direct and Inrom Construction
Assuming the 90 days trading horizon Computer Direct is expected to generate 0.81 times more return on investment than Inrom Construction. However, Computer Direct is 1.24 times less risky than Inrom Construction. It trades about 0.59 of its potential returns per unit of risk. Inrom Construction Industries is currently generating about 0.45 per unit of risk. If you would invest 2,767,000 in Computer Direct on August 25, 2024 and sell it today you would earn a total of 590,000 from holding Computer Direct or generate 21.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer Direct vs. Inrom Construction Industries
Performance |
| Timeline |
| Computer Direct |
| Inrom Construction |
Computer Direct and Inrom Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Direct and Inrom Construction
The main advantage of trading using opposite Computer Direct and Inrom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Direct position performs unexpectedly, Inrom Construction 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 Inrom Construction will offset losses from the drop in Inrom Construction's long position.| Computer Direct vs. Matrix | Computer Direct vs. Hilan | Computer Direct vs. One Software Technologies | Computer Direct vs. Atreyu Capital Markets |
| Inrom Construction vs. Arad | Inrom Construction vs. Alony Hetz Properties | Inrom Construction vs. Danel | Inrom Construction vs. Airport City |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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