Correlation Between Compucom Software and Refex Industries

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

Diversification Opportunities for Compucom Software and Refex Industries

-0.37

Correlation Coefficient

Compucom Software  Refex Industries

Very good diversification

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

Pair Corralation between Compucom Software and Refex Industries

Assuming the 90 days trading horizon Compucom Software Limited is expected to under-perform the Refex Industries. But the stock apears to be less risky and, when comparing its historical volatility, Compucom Software Limited is 1.04 times less risky than Refex Industries. The stock trades about -0.08 of its potential returns per unit of risk. The Refex Industries Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  48,675  in Refex Industries Limited on September 14, 2024 and sell it today you would earn a total of  3,885  from holding Refex Industries Limited or generate 7.98% return on investment over 90 days.

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

Compucom Software Limited  vs.  Refex Industries 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 unsteady 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.

Refex Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Refex Industries Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Refex Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Compucom Software and Refex Industries

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

The idea behind Compucom Software Limited and Refex Industries 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .