Correlation Between CN MODERN and Computer

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

By analyzing existing cross correlation between CN MODERN DAIRY and Computer And Technologies, you can compare the effects of market volatilities on CN MODERN and Computer 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 CN MODERN with a short position of Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Computer.

Diversification Opportunities for CN MODERN and Computer

-0.43

Correlation Coefficient

CN MODERN  Computer

Very good diversification

The 3 months correlation between 07M and Computer is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Computer And Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer And Technologies and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer And Technologies has no effect on the direction of CN MODERN i.e., CN MODERN and Computer go up and down completely randomly.

Pair Corralation between CN MODERN and Computer

Assuming the 90 days trading horizon CN MODERN is expected to generate 11.9 times less return on investment than Computer. But when comparing it to its historical volatility, CN MODERN DAIRY is 1.4 times less risky than Computer. It trades about 0.01 of its potential returns per unit of risk. Computer And Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8.19  in Computer And Technologies on October 24, 2024 and sell it today you would earn a total of  8.81  from holding Computer And Technologies or generate 107.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

CN MODERN DAIRY  vs.  Computer And Technologies

CN MODERN DAIRY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CN MODERN DAIRY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, CN MODERN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Computer And Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer And Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CN MODERN and Computer

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

The idea behind CN MODERN DAIRY and Computer And Technologies 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.