Correlation Between Computer Modelling and Aztec Minerals

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

Diversification Opportunities for Computer Modelling and Aztec Minerals

0.37

Correlation Coefficient

Computer Modelling  Aztec Minerals

Weak diversification

The 3 months correlation between Computer and Aztec is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group and Aztec Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aztec Minerals Corp 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 Aztec Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aztec Minerals Corp has no effect on the direction of Computer Modelling i.e., Computer Modelling and Aztec Minerals go up and down completely randomly.

Pair Corralation between Computer Modelling and Aztec Minerals

Assuming the 90 days trading horizon Computer Modelling Group is expected to generate 0.38 times more return on investment than Aztec Minerals. However, Computer Modelling Group is 2.63 times less risky than Aztec Minerals. It trades about 0.05 of its potential returns per unit of risk. Aztec Minerals Corp is currently generating about -0.05 per unit of risk. If you would invest  1,035  in Computer Modelling Group on September 27, 2024 and sell it today you would earn a total of  18.00  from holding Computer Modelling Group or generate 1.74% return on investment over 90 days.

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

Computer Modelling Group  vs.  Aztec Minerals Corp

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. In spite of very healthy technical and fundamental indicators, Computer Modelling is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Aztec Minerals Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Minerals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Aztec Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer Modelling and Aztec Minerals

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

The idea behind Computer Modelling Group and Aztec Minerals Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.