Correlation Between Computer Modelling and Auddia

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

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

Diversification Opportunities for Computer Modelling and Auddia

0.69

Correlation Coefficient

Computer Modelling  Auddia

Poor diversification

The 3 months correlation between Computer and Auddia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group and Auddia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auddia Inc and Computer Modelling 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 Modelling Group are associated (or correlated) with Auddia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auddia Inc has no effect on the direction of Computer Modelling i.e., Computer Modelling and Auddia go up and down completely randomly.

Pair Corralation between Computer Modelling and Auddia

Assuming the 90 days horizon Computer Modelling Group is expected to under-perform the Auddia. But the pink sheet apears to be less risky and, when comparing its historical volatility, Computer Modelling Group is 20.01 times less risky than Auddia. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Auddia Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Auddia Inc on October 25, 2024 and sell it today you would earn a total of  0.69  from holding Auddia Inc or generate 36.32% return on investment over 90 days.

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

Computer Modelling Group  vs.  Auddia Inc

Computer Modelling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer Modelling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Auddia Inc

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auddia Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Auddia showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer Modelling and Auddia

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

The idea behind Computer Modelling Group and Auddia Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.