Correlation Between Computer Direct and Menif Financial

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

By analyzing existing cross correlation between Computer Direct and Menif Financial Services, you can compare the effects of market volatilities on Computer Direct and Menif Financial 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 Direct with a short position of Menif Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Direct and Menif Financial.

Diversification Opportunities for Computer Direct and Menif Financial

-0.01

Correlation Coefficient

Computer Direct  Menif Financial

Good diversification

The 3 months correlation between Computer and Menif is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Computer Direct and Menif Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menif Financial Services and Computer Direct 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 Direct are associated (or correlated) with Menif Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menif Financial Services has no effect on the direction of Computer Direct i.e., Computer Direct and Menif Financial go up and down completely randomly.

Pair Corralation between Computer Direct and Menif Financial

Assuming the 90 days trading horizon Computer Direct is expected to under-perform the Menif Financial. But the stock apears to be less risky and, when comparing its historical volatility, Computer Direct is 1.05 times less risky than Menif Financial. The stock trades about -0.07 of its potential returns per unit of risk. The Menif Financial Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  158,337  in Menif Financial Services on December 21, 2024 and sell it today you would earn a total of  16,263  from holding Menif Financial Services or generate 10.27% return on investment over 90 days.

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

Computer Direct  vs.  Menif Financial Services

Computer Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Computer Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Menif Financial Services

Risk-Adjusted Performance

OK

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

Pair Trading with Computer Direct and Menif Financial

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

The idea behind Computer Direct and Menif Financial Services 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.