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

0.94

Correlation Coefficient

Computer Direct  Inrom Construction

Almost no diversification

The 3 months correlation between Computer and Inrom is 0.94. 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 1.07 times less return on investment than Inrom Construction. But when comparing it to its historical volatility, Computer Direct is 1.14 times less risky than Inrom Construction. It trades about 0.41 of its potential returns per unit of risk. Inrom Construction Industries is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  114,011  in Inrom Construction Industries on September 5, 2024 and sell it today you would earn a total of  51,389  from holding Inrom Construction Industries or generate 45.07% 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

Computer Direct

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Direct are ranked lower than 32 (%) 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.

Inrom Construction

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Inrom Construction Industries are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inrom Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Computer Direct and Inrom Construction Industries 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 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.