Correlation Between Image Protect and Computer Modelling

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

By analyzing existing cross correlation between Image Protect and Computer Modelling Group, you can compare the effects of market volatilities on Image Protect and Computer Modelling 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 Image Protect with a short position of Computer Modelling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Image Protect and Computer Modelling.

Diversification Opportunities for Image Protect and Computer Modelling

0.36

Correlation Coefficient

Image Protect  Computer Modelling

Weak diversification

The 3 months correlation between Image and Computer is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Image Protect and Computer Modelling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Modelling and Image Protect 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 Image Protect are associated (or correlated) with Computer Modelling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Modelling has no effect on the direction of Image Protect i.e., Image Protect and Computer Modelling go up and down completely randomly.

Pair Corralation between Image Protect and Computer Modelling

Given the investment horizon of 90 days Image Protect is expected to generate 50.04 times more return on investment than Computer Modelling. However, Image Protect is 50.04 times more volatile than Computer Modelling Group. It trades about 0.13 of its potential returns per unit of risk. Computer Modelling Group is currently generating about -0.11 per unit of risk. If you would invest  0.02  in Image Protect on December 29, 2024 and sell it today you would lose (0.01) from holding Image Protect or give up 50.0% of portfolio value over 90 days.

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

Image Protect  vs.  Computer Modelling Group

Image Protect

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Image Protect are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Image Protect disclosed solid returns over the last few months and may actually be approaching a breakup point.

Computer Modelling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Computer Modelling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Image Protect and Computer Modelling

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

The idea behind Image Protect and Computer Modelling Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..