Correlation Between Computer Age and SIL Investments

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

Diversification Opportunities for Computer Age and SIL Investments

0.51

Correlation Coefficient

Computer Age  SIL Investments

Very weak diversification

The 3 months correlation between Computer and SIL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and SIL Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIL Investments 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 SIL Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIL Investments has no effect on the direction of Computer Age i.e., Computer Age and SIL Investments go up and down completely randomly.

Pair Corralation between Computer Age and SIL Investments

Assuming the 90 days trading horizon Computer Age Management is expected to generate 0.73 times more return on investment than SIL Investments. However, Computer Age Management is 1.36 times less risky than SIL Investments. It trades about 0.1 of its potential returns per unit of risk. SIL Investments Limited is currently generating about 0.06 per unit of risk. If you would invest  214,405  in Computer Age Management on September 20, 2024 and sell it today you would earn a total of  298,715  from holding Computer Age Management or generate 139.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Computer Age Management  vs.  SIL Investments Limited

Computer Age Management

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Computer Age unveiled solid returns over the last few months and may actually be approaching a breakup point.

SIL Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIL Investments Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, SIL Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer Age and SIL Investments

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

The idea behind Computer Age Management and SIL Investments 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.