Correlation Between Compucom Software and Apex Frozen

Can any of the company-specific risk be diversified away by investing in both Compucom Software and Apex Frozen 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 Apex Frozen 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 Apex Frozen Foods, you can compare the effects of market volatilities on Compucom Software and Apex Frozen 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 Apex Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compucom Software and Apex Frozen.

Diversification Opportunities for Compucom Software and Apex Frozen

0.38

Correlation Coefficient

Compucom Software  Apex Frozen

Weak diversification

The 3 months correlation between Compucom and Apex is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Apex Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Frozen Foods 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 Apex Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Frozen Foods has no effect on the direction of Compucom Software i.e., Compucom Software and Apex Frozen go up and down completely randomly.

Pair Corralation between Compucom Software and Apex Frozen

Assuming the 90 days trading horizon Compucom Software is expected to generate 1.54 times less return on investment than Apex Frozen. But when comparing it to its historical volatility, Compucom Software Limited is 1.38 times less risky than Apex Frozen. It trades about 0.21 of its potential returns per unit of risk. Apex Frozen Foods is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  23,029  in Apex Frozen Foods on September 15, 2024 and sell it today you would earn a total of  2,861  from holding Apex Frozen Foods or generate 12.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Compucom Software Limited  vs.  Apex Frozen Foods

Compucom Software

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Apex Frozen Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Frozen Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Apex Frozen is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compucom Software and Apex Frozen

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

The idea behind Compucom Software Limited and Apex Frozen Foods 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.