Correlation Between Compucom Software and Kewal Kiran

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

Diversification Opportunities for Compucom Software and Kewal Kiran

0.62

Correlation Coefficient

Compucom Software  Kewal Kiran

Poor diversification

The 3 months correlation between Compucom and Kewal is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing 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 Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of Compucom Software i.e., Compucom Software and Kewal Kiran go up and down completely randomly.

Pair Corralation between Compucom Software and Kewal Kiran

Assuming the 90 days trading horizon Compucom Software Limited is expected to generate 1.96 times more return on investment than Kewal Kiran. However, Compucom Software is 1.96 times more volatile than Kewal Kiran Clothing. It trades about 0.04 of its potential returns per unit of risk. Kewal Kiran Clothing is currently generating about 0.03 per unit of risk. If you would invest  1,981  in Compucom Software Limited on October 5, 2024 and sell it today you would earn a total of  889.00  from holding Compucom Software Limited or generate 44.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.39%
Values	Daily Returns

Compucom Software Limited  vs.  Kewal Kiran Clothing

Compucom Software

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compucom Software Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Compucom Software is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Kewal Kiran Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kewal Kiran Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kewal Kiran is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compucom Software and Kewal Kiran

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

The idea behind Compucom Software Limited and Kewal Kiran Clothing 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.