Correlation Between Compucom Software and SINCLAIRS HOTELS

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

Diversification Opportunities for Compucom Software and SINCLAIRS HOTELS

0.62

Correlation Coefficient

Compucom Software  SINCLAIRS HOTELS

Poor diversification

The 3 months correlation between Compucom and SINCLAIRS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and SINCLAIRS HOTELS ORD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINCLAIRS HOTELS ORD 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 SINCLAIRS HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINCLAIRS HOTELS ORD has no effect on the direction of Compucom Software i.e., Compucom Software and SINCLAIRS HOTELS go up and down completely randomly.

Pair Corralation between Compucom Software and SINCLAIRS HOTELS

Assuming the 90 days trading horizon Compucom Software Limited is expected to under-perform the SINCLAIRS HOTELS. In addition to that, Compucom Software is 1.49 times more volatile than SINCLAIRS HOTELS ORD. It trades about -0.02 of its total potential returns per unit of risk. SINCLAIRS HOTELS ORD is currently generating about 0.01 per unit of volatility. If you would invest  10,626  in SINCLAIRS HOTELS ORD on September 2, 2024 and sell it today you would earn a total of  32.00  from holding SINCLAIRS HOTELS ORD or generate 0.3% return on investment over 90 days.

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

Compucom Software Limited  vs.  SINCLAIRS HOTELS ORD

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 very healthy basic indicators, Compucom Software is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

SINCLAIRS HOTELS ORD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SINCLAIRS HOTELS ORD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, SINCLAIRS HOTELS is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Compucom Software and SINCLAIRS HOTELS

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

The idea behind Compucom Software Limited and SINCLAIRS HOTELS ORD 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.