Correlation Between Compucom Software and Whirlpool

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Can any of the company-specific risk be diversified away by investing in both Compucom Software and Whirlpool 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 Compucom Software and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compucom Software Limited and Whirlpool of India, you can compare the effects of market volatilities on Compucom Software and Whirlpool 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 Compucom Software with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compucom Software and Whirlpool.

Diversification Opportunities for Compucom Software and Whirlpool

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Compucom and Whirlpool is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Whirlpool of India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool of India and Compucom Software 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 Compucom Software Limited are associated (or correlated) with Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool of India has no effect on the direction of Compucom Software i.e., Compucom Software and Whirlpool go up and down completely randomly.

Pair Corralation between Compucom Software and Whirlpool

Assuming the 90 days trading horizon Compucom Software Limited is expected to generate 0.68 times more return on investment than Whirlpool. However, Compucom Software Limited is 1.47 times less risky than Whirlpool. It trades about -0.24 of its potential returns per unit of risk. Whirlpool of India is currently generating about -0.42 per unit of risk. If you would invest  2,817  in Compucom Software Limited on November 4, 2024 and sell it today you would lose (494.00) from holding Compucom Software Limited or give up 17.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Compucom Software Limited  vs.  Whirlpool of India

 Performance 
       Timeline  
Compucom Software 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Compucom Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Whirlpool of India 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Whirlpool of India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Compucom Software and Whirlpool Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Compucom Software and Whirlpool

The main advantage of trading using opposite Compucom Software and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compucom Software position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.
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The idea behind Compucom Software Limited and Whirlpool of India 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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