Correlation Between Computer Age and MIRC Electronics

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

Diversification Opportunities for Computer Age and MIRC Electronics

0.49

Correlation Coefficient

Computer Age  MIRC Electronics

Very weak diversification

The 3 months correlation between Computer and MIRC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and MIRC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRC Electronics 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 MIRC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRC Electronics has no effect on the direction of Computer Age i.e., Computer Age and MIRC Electronics go up and down completely randomly.

Pair Corralation between Computer Age and MIRC Electronics

Assuming the 90 days trading horizon Computer Age Management is expected to generate 0.86 times more return on investment than MIRC Electronics. However, Computer Age Management is 1.17 times less risky than MIRC Electronics. It trades about -0.13 of its potential returns per unit of risk. MIRC Electronics Limited is currently generating about -0.22 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	Weak
Accuracy	100.0%
Values	Daily Returns

Computer Age Management  vs.  MIRC Electronics 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.

MIRC Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days MIRC Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental 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 MIRC Electronics

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

The idea behind Computer Age Management and MIRC Electronics 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.