Correlation Between COMPUTER MODELLING and IND+COMMBK CHINA

Can any of the company-specific risk be diversified away by investing in both COMPUTER MODELLING and IND+COMMBK CHINA 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 COMPUTER MODELLING and IND+COMMBK CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COMPUTER MODELLING and INDCOMMBK CHINA ADR20, you can compare the effects of market volatilities on COMPUTER MODELLING and IND+COMMBK CHINA 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 COMPUTER MODELLING with a short position of IND+COMMBK CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMPUTER MODELLING and IND+COMMBK CHINA.

Diversification Opportunities for COMPUTER MODELLING and IND+COMMBK CHINA

0.21

Correlation Coefficient

COMPUTER MODELLING  IND+COMMBK CHINA

Modest diversification

The 3 months correlation between COMPUTER and IND+COMMBK is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding COMPUTER MODELLING and INDCOMMBK CHINA ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDCOMMBK CHINA ADR20 and COMPUTER MODELLING 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 COMPUTER MODELLING are associated (or correlated) with IND+COMMBK CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDCOMMBK CHINA ADR20 has no effect on the direction of COMPUTER MODELLING i.e., COMPUTER MODELLING and IND+COMMBK CHINA go up and down completely randomly.

Pair Corralation between COMPUTER MODELLING and IND+COMMBK CHINA

Assuming the 90 days trading horizon COMPUTER MODELLING is expected to generate 11.07 times less return on investment than IND+COMMBK CHINA. But when comparing it to its historical volatility, COMPUTER MODELLING is 8.75 times less risky than IND+COMMBK CHINA. It trades about 0.07 of its potential returns per unit of risk. INDCOMMBK CHINA ADR20 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,208  in INDCOMMBK CHINA ADR20 on December 25, 2024 and sell it today you would earn a total of  102.00  from holding INDCOMMBK CHINA ADR20 or generate 8.44% return on investment over 90 days.

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

COMPUTER MODELLING  vs.  INDCOMMBK CHINA ADR20

COMPUTER MODELLING

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTER MODELLING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, COMPUTER MODELLING is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

INDCOMMBK CHINA ADR20

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDCOMMBK CHINA ADR20 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, IND+COMMBK CHINA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with COMPUTER MODELLING and IND+COMMBK CHINA

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

The idea behind COMPUTER MODELLING and INDCOMMBK CHINA ADR20 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.