Correlation Between Compucom Software and Hi Tech

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

By analyzing existing cross correlation between Compucom Software Limited and Hi Tech Pipes Limited, you can compare the effects of market volatilities on Compucom Software and Hi Tech 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 Compucom Software with a short position of Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compucom Software and Hi Tech.

Diversification Opportunities for Compucom Software and Hi Tech

0.67

Correlation Coefficient

Compucom Software  Hi Tech

Poor diversification

The 3 months correlation between Compucom and HITECH is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Hi Tech Pipes Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Pipes and Compucom Software 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 Compucom Software Limited are associated (or correlated) with Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Pipes has no effect on the direction of Compucom Software i.e., Compucom Software and Hi Tech go up and down completely randomly.

Pair Corralation between Compucom Software and Hi Tech

Assuming the 90 days trading horizon Compucom Software Limited is expected to under-perform the Hi Tech. In addition to that, Compucom Software is 1.37 times more volatile than Hi Tech Pipes Limited. It trades about -0.12 of its total potential returns per unit of risk. Hi Tech Pipes Limited is currently generating about -0.07 per unit of volatility. If you would invest  19,404  in Hi Tech Pipes Limited on September 12, 2024 and sell it today you would lose (2,192) from holding Hi Tech Pipes Limited or give up 11.3% of portfolio value over 90 days.

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

Compucom Software Limited  vs.  Hi Tech Pipes Limited

Compucom Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compucom Software Limited 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hi Tech Pipes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hi Tech Pipes Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Compucom Software and Hi Tech

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

The idea behind Compucom Software Limited and Hi Tech Pipes Limited 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.