Correlation Between Computer Direct and Iargento

Can any of the company-specific risk be diversified away by investing in both Computer Direct and Iargento 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 Iargento into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Computer Direct and Iargento Hi Tech, you can compare the effects of market volatilities on Computer Direct and Iargento 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 Iargento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Direct and Iargento.

Diversification Opportunities for Computer Direct and Iargento

-0.3

Correlation Coefficient

Computer Direct  Iargento

Very good diversification

The 3 months correlation between Computer and Iargento is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Computer Direct and Iargento Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iargento Hi Tech 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 Iargento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iargento Hi Tech has no effect on the direction of Computer Direct i.e., Computer Direct and Iargento go up and down completely randomly.

Pair Corralation between Computer Direct and Iargento

Assuming the 90 days trading horizon Computer Direct is expected to generate 0.49 times more return on investment than Iargento. However, Computer Direct is 2.06 times less risky than Iargento. It trades about 0.55 of its potential returns per unit of risk. Iargento Hi Tech is currently generating about -0.05 per unit of risk. If you would invest  2,645,019  in Computer Direct on September 27, 2024 and sell it today you would earn a total of  1,423,981  from holding Computer Direct or generate 53.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Computer Direct  vs.  Iargento Hi Tech

Computer Direct

Risk-Adjusted Performance

43 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Direct are ranked lower than 43 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Computer Direct sustained solid returns over the last few months and may actually be approaching a breakup point.

Iargento Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iargento Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Computer Direct and Iargento

The main advantage of trading using opposite Computer Direct and Iargento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Direct position performs unexpectedly, Iargento 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 Iargento will offset losses from the drop in Iargento's long position.

The idea behind Computer Direct and Iargento Hi Tech 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.