Correlation Between EN Shoham and Computer Direct

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

By analyzing existing cross correlation between EN Shoham Business and Computer Direct, you can compare the effects of market volatilities on EN Shoham and Computer Direct 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 EN Shoham with a short position of Computer Direct. Check out your portfolio center. Please also check ongoing floating volatility patterns of EN Shoham and Computer Direct.

Diversification Opportunities for EN Shoham and Computer Direct

0.97

Correlation Coefficient

EN Shoham  Computer Direct

Almost no diversification

The 3 months correlation between SHOM and Computer is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business and Computer Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Direct and EN Shoham 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 EN Shoham Business are associated (or correlated) with Computer Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Direct has no effect on the direction of EN Shoham i.e., EN Shoham and Computer Direct go up and down completely randomly.

Pair Corralation between EN Shoham and Computer Direct

Assuming the 90 days trading horizon EN Shoham is expected to generate 1.83 times less return on investment than Computer Direct. In addition to that, EN Shoham is 1.3 times more volatile than Computer Direct. It trades about 0.04 of its total potential returns per unit of risk. Computer Direct is currently generating about 0.11 per unit of volatility. If you would invest  1,905,730  in Computer Direct on September 26, 2024 and sell it today you would earn a total of  2,128,270  from holding Computer Direct or generate 111.68% return on investment over 90 days.

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

EN Shoham Business  vs.  Computer Direct

EN Shoham Business

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in EN Shoham Business are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EN Shoham sustained solid returns over the last few months and may actually be approaching a breakup point.

Computer Direct

Risk-Adjusted Performance

44 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Direct are ranked lower than 44 (%) 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.

Pair Trading with EN Shoham and Computer Direct

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

The idea behind EN Shoham Business and Computer Direct 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.