Correlation Between Computer Age and Fiberweb (India)

Can any of the company-specific risk be diversified away by investing in both Computer Age and Fiberweb (India) 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 Fiberweb (India) 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 Fiberweb Limited, you can compare the effects of market volatilities on Computer Age and Fiberweb (India) 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 Fiberweb (India). Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Age and Fiberweb (India).

Diversification Opportunities for Computer Age and Fiberweb (India)

0.77

Correlation Coefficient

Computer Age  Fiberweb (India)

Poor diversification

The 3 months correlation between Computer and Fiberweb is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Fiberweb Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiberweb Limited 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 Fiberweb (India). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiberweb Limited has no effect on the direction of Computer Age i.e., Computer Age and Fiberweb (India) go up and down completely randomly.

Pair Corralation between Computer Age and Fiberweb (India)

Assuming the 90 days trading horizon Computer Age Management is expected to generate 0.97 times more return on investment than Fiberweb (India). However, Computer Age Management is 1.03 times less risky than Fiberweb (India). It trades about -0.13 of its potential returns per unit of risk. Fiberweb Limited is currently generating about -0.18 per unit of risk. If you would invest  494,028  in Computer Age Management on December 26, 2024 and sell it today you would lose (128,253) from holding Computer Age Management or give up 25.96% of portfolio value over 90 days.

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

Computer Age Management  vs.  Fiberweb Limited

Computer Age Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Computer Age Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fiberweb Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fiberweb Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Computer Age and Fiberweb (India)

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

The idea behind Computer Age Management and Fiberweb Limited 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.