Correlation Between CPI Computer and Intertech

Can any of the company-specific risk be diversified away by investing in both CPI Computer and Intertech 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 Intertech 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 Intertech SA Inter, you can compare the effects of market volatilities on CPI Computer and Intertech 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 Intertech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Computer and Intertech.

Diversification Opportunities for CPI Computer and Intertech

0.65

Correlation Coefficient

CPI Computer  Intertech

Poor diversification

The 3 months correlation between CPI and Intertech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CPI Computer Peripherals and Intertech SA Inter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertech SA Inter 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 Intertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertech SA Inter has no effect on the direction of CPI Computer i.e., CPI Computer and Intertech go up and down completely randomly.

Pair Corralation between CPI Computer and Intertech

Assuming the 90 days trading horizon CPI Computer Peripherals is expected to generate 1.29 times more return on investment than Intertech. However, CPI Computer is 1.29 times more volatile than Intertech SA Inter. It trades about 0.06 of its potential returns per unit of risk. Intertech SA Inter is currently generating about 0.06 per unit of risk. If you would invest  55.00  in CPI Computer Peripherals on December 30, 2024 and sell it today you would earn a total of  5.00  from holding CPI Computer Peripherals or generate 9.09% return on investment over 90 days.

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

CPI Computer Peripherals  vs.  Intertech SA Inter

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.

Intertech SA Inter

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intertech SA Inter are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intertech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CPI Computer and Intertech

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

The idea behind CPI Computer Peripherals and Intertech SA Inter 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.