Correlation Between Computer Age and Agro Phos

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

By analyzing existing cross correlation between Computer Age Management and Agro Phos India, you can compare the effects of market volatilities on Computer Age and Agro Phos 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 Age with a short position of Agro Phos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Age and Agro Phos.

Diversification Opportunities for Computer Age and Agro Phos

-0.42

Correlation Coefficient

Computer Age  Agro Phos

Very good diversification

The 3 months correlation between Computer and Agro is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Agro Phos India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Phos India and Computer Age 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 Age Management are associated (or correlated) with Agro Phos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Phos India has no effect on the direction of Computer Age i.e., Computer Age and Agro Phos go up and down completely randomly.

Pair Corralation between Computer Age and Agro Phos

Assuming the 90 days trading horizon Computer Age Management is expected to under-perform the Agro Phos. But the stock apears to be less risky and, when comparing its historical volatility, Computer Age Management is 1.08 times less risky than Agro Phos. The stock trades about -0.22 of its potential returns per unit of risk. The Agro Phos India is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  4,298  in Agro Phos India on October 10, 2024 and sell it today you would lose (251.00) from holding Agro Phos India or give up 5.84% of portfolio value over 90 days.

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

Computer Age Management  vs.  Agro Phos India

Computer Age Management

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Computer Age may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Agro Phos India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agro Phos India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Computer Age and Agro Phos

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

The idea behind Computer Age Management and Agro Phos India 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.