Correlation Between Computer Modelling and Lycos Energy

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

Diversification Opportunities for Computer Modelling and Lycos Energy

0.24

Correlation Coefficient

Computer Modelling  Lycos Energy

Modest diversification

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

Pair Corralation between Computer Modelling and Lycos Energy

Assuming the 90 days trading horizon Computer Modelling Group is expected to under-perform the Lycos Energy. But the stock apears to be less risky and, when comparing its historical volatility, Computer Modelling Group is 1.26 times less risky than Lycos Energy. The stock trades about -0.08 of its potential returns per unit of risk. The Lycos Energy is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  334.00  in Lycos Energy on October 4, 2024 and sell it today you would lose (74.00) from holding Lycos Energy or give up 22.16% of portfolio value over 90 days.

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

Computer Modelling Group  vs.  Lycos Energy

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Lycos Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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 Lycos Energy

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

The idea behind Computer Modelling Group and Lycos Energy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.