Correlation Between Formula Systems and Computer Task
Can any of the company-specific risk be diversified away by investing in both Formula Systems and Computer Task 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 Formula Systems and Computer Task into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formula Systems 1985 and Computer Task Group, you can compare the effects of market volatilities on Formula Systems and Computer Task 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 Formula Systems with a short position of Computer Task. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formula Systems and Computer Task.
Diversification Opportunities for Formula Systems and Computer Task
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formula and Computer is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Formula Systems 1985 and Computer Task Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Task Group and Formula Systems 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 Formula Systems 1985 are associated (or correlated) with Computer Task. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Task Group has no effect on the direction of Formula Systems i.e., Formula Systems and Computer Task go up and down completely randomly.
Pair Corralation between Formula Systems and Computer Task
Assuming the 90 days horizon Formula Systems is expected to generate 2.07 times less return on investment than Computer Task. In addition to that, Formula Systems is 1.17 times more volatile than Computer Task Group. It trades about 0.01 of its total potential returns per unit of risk. Computer Task Group is currently generating about 0.03 per unit of volatility. If you would invest 705.00 in Computer Task Group on August 24, 2024 and sell it today you would earn a total of 63.00 from holding Computer Task Group or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.85% |
| Values | Daily Returns |
Formula Systems 1985 vs. Computer Task Group
Performance |
| Timeline |
| Formula Systems 1985 |
| Computer Task Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Formula Systems and Computer Task Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formula Systems and Computer Task
The main advantage of trading using opposite Formula Systems and Computer Task positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formula Systems position performs unexpectedly, Computer Task 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 Computer Task will offset losses from the drop in Computer Task's long position.| Formula Systems vs. Concentrix | Formula Systems vs. Accenture plc | Formula Systems vs. International Business Machines | Formula Systems vs. Cognizant Technology Solutions |
| Computer Task vs. The Hackett Group | Computer Task vs. CSP Inc | Computer Task vs. Nayax | Computer Task vs. Formula Systems 1985 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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