Correlation Between Computer Modelling and Homerun Resources

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

Diversification Opportunities for Computer Modelling and Homerun Resources

-0.24

Correlation Coefficient

Computer Modelling  Homerun Resources

Very good diversification

The 3 months correlation between Computer and Homerun is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group and Homerun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homerun Resources 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 Homerun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homerun Resources has no effect on the direction of Computer Modelling i.e., Computer Modelling and Homerun Resources go up and down completely randomly.

Pair Corralation between Computer Modelling and Homerun Resources

Assuming the 90 days trading horizon Computer Modelling Group is expected to under-perform the Homerun Resources. But the stock apears to be less risky and, when comparing its historical volatility, Computer Modelling Group is 1.98 times less risky than Homerun Resources. The stock trades about -0.17 of its potential returns per unit of risk. The Homerun Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Homerun Resources on December 22, 2024 and sell it today you would lose (18.00) from holding Homerun Resources or give up 14.06% of portfolio value over 90 days.

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

Computer Modelling Group  vs.  Homerun Resources

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. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Homerun Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Homerun Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Computer Modelling and Homerun Resources

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

The idea behind Computer Modelling Group and Homerun Resources 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.