Correlation Between Computer Modelling and Intouch Insight

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

Diversification Opportunities for Computer Modelling and Intouch Insight

0.77

Correlation Coefficient

Computer Modelling  Intouch Insight

Poor diversification

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

Pair Corralation between Computer Modelling and Intouch Insight

Assuming the 90 days horizon Computer Modelling Group is expected to under-perform the Intouch Insight. But the pink sheet apears to be less risky and, when comparing its historical volatility, Computer Modelling Group is 1.29 times less risky than Intouch Insight. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Intouch Insight is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Intouch Insight on December 30, 2024 and sell it today you would lose (5.00) from holding Intouch Insight or give up 13.16% of portfolio value over 90 days.

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

Computer Modelling Group  vs.  Intouch Insight

Computer Modelling

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Intouch Insight

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Computer Modelling and Intouch Insight

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

The idea behind Computer Modelling Group and Intouch Insight 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.