Correlation Between CPI Computer and As Commercial

Can any of the company-specific risk be diversified away by investing in both CPI Computer and As Commercial 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 CPI Computer and As Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CPI Computer Peripherals and As Commercial Industrial, you can compare the effects of market volatilities on CPI Computer and As Commercial 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 CPI Computer with a short position of As Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Computer and As Commercial.

Diversification Opportunities for CPI Computer and As Commercial

0.53

Correlation Coefficient

CPI Computer  As Commercial

Very weak diversification

The 3 months correlation between CPI and ASCO is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CPI Computer Peripherals and As Commercial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on As Commercial Industrial and CPI Computer 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 CPI Computer Peripherals are associated (or correlated) with As Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of As Commercial Industrial has no effect on the direction of CPI Computer i.e., CPI Computer and As Commercial go up and down completely randomly.

Pair Corralation between CPI Computer and As Commercial

Assuming the 90 days trading horizon CPI Computer is expected to generate 2.26 times less return on investment than As Commercial. In addition to that, CPI Computer is 2.0 times more volatile than As Commercial Industrial. It trades about 0.06 of its total potential returns per unit of risk. As Commercial Industrial is currently generating about 0.27 per unit of volatility. If you would invest  281.00  in As Commercial Industrial on December 28, 2024 and sell it today you would earn a total of  84.00  from holding As Commercial Industrial or generate 29.89% return on investment over 90 days.

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

CPI Computer Peripherals  vs.  As Commercial Industrial

CPI Computer Peripherals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CPI Computer Peripherals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, CPI Computer may actually be approaching a critical reversion point that can send shares even higher in April 2025.

As Commercial Industrial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in As Commercial Industrial are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, As Commercial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPI Computer and As Commercial

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

The idea behind CPI Computer Peripherals and As Commercial Industrial 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.