Correlation Between Compucom Software and Vaxtex Cotfab

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

Diversification Opportunities for Compucom Software and Vaxtex Cotfab

0.18

Correlation Coefficient

Compucom Software  Vaxtex Cotfab

Average diversification

The 3 months correlation between Compucom and Vaxtex is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Vaxtex Cotfab Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxtex Cotfab Limited 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 Vaxtex Cotfab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxtex Cotfab Limited has no effect on the direction of Compucom Software i.e., Compucom Software and Vaxtex Cotfab go up and down completely randomly.

Pair Corralation between Compucom Software and Vaxtex Cotfab

Assuming the 90 days trading horizon Compucom Software Limited is expected to generate 0.68 times more return on investment than Vaxtex Cotfab. However, Compucom Software Limited is 1.47 times less risky than Vaxtex Cotfab. It trades about -0.08 of its potential returns per unit of risk. Vaxtex Cotfab Limited is currently generating about -0.17 per unit of risk. If you would invest  2,880  in Compucom Software Limited on October 10, 2024 and sell it today you would lose (118.00) from holding Compucom Software Limited or give up 4.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Compucom Software Limited  vs.  Vaxtex Cotfab 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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Vaxtex Cotfab Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vaxtex Cotfab Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Vaxtex Cotfab is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Compucom Software and Vaxtex Cotfab

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

The idea behind Compucom Software Limited and Vaxtex Cotfab 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.