Correlation Between LT Technology and Computer Age

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

Diversification Opportunities for LT Technology and Computer Age

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between LTTS and Computer is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding LT Technology Services and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and LT Technology 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 LT Technology Services are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of LT Technology i.e., LT Technology and Computer Age go up and down completely randomly.

Pair Corralation between LT Technology and Computer Age

Assuming the 90 days trading horizon LT Technology Services is expected to generate 0.88 times more return on investment than Computer Age. However, LT Technology Services is 1.14 times less risky than Computer Age. It trades about 0.29 of its potential returns per unit of risk. Computer Age Management is currently generating about -0.36 per unit of risk. If you would invest  472,955  in LT Technology Services on October 25, 2024 and sell it today you would earn a total of  65,340  from holding LT Technology Services or generate 13.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

LT Technology Services  vs.  Computer Age Management

 Performance 
       Timeline  
LT Technology Services 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in LT Technology Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LT Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Computer Age Management 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Computer Age Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Computer Age is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

LT Technology and Computer Age Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LT Technology and Computer Age

The main advantage of trading using opposite LT Technology and Computer Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LT Technology position performs unexpectedly, Computer Age 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 Age will offset losses from the drop in Computer Age's long position.
The idea behind LT Technology Services and Computer Age Management 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.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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