Correlation Between Compucom Software and UTI Asset

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

Diversification Opportunities for Compucom Software and UTI Asset

0.0

Correlation Coefficient

Compucom Software  UTI Asset

Pay attention - limited upside

The 3 months correlation between Compucom and UTI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and UTI Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTI Asset Management 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 UTI Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTI Asset Management has no effect on the direction of Compucom Software i.e., Compucom Software and UTI Asset go up and down completely randomly.

Pair Corralation between Compucom Software and UTI Asset

Assuming the 90 days trading horizon Compucom Software Limited is expected to under-perform the UTI Asset. In addition to that, Compucom Software is 1.46 times more volatile than UTI Asset Management. It trades about -0.03 of its total potential returns per unit of risk. UTI Asset Management is currently generating about 0.03 per unit of volatility. If you would invest  126,725  in UTI Asset Management on September 5, 2024 and sell it today you would earn a total of  4,195  from holding UTI Asset Management or generate 3.31% return on investment over 90 days.

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

Compucom Software Limited  vs.  UTI Asset Management

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

UTI Asset Management

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Asset Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UTI Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compucom Software and UTI Asset

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

The idea behind Compucom Software Limited and UTI Asset 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.