Correlation Between Intertech and CPI Computer

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

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

Diversification Opportunities for Intertech and CPI Computer

0.66

Correlation Coefficient

Intertech  CPI Computer

Poor diversification

The 3 months correlation between Intertech and CPI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Intertech SA Inter and CPI Computer Peripherals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Computer Peripherals and Intertech 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 Intertech SA Inter are associated (or correlated) with CPI Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Computer Peripherals has no effect on the direction of Intertech i.e., Intertech and CPI Computer go up and down completely randomly.

Pair Corralation between Intertech and CPI Computer

Assuming the 90 days trading horizon Intertech is expected to generate 1.59 times less return on investment than CPI Computer. But when comparing it to its historical volatility, Intertech SA Inter is 1.3 times less risky than CPI Computer. It trades about 0.05 of its potential returns per unit of risk. CPI Computer Peripherals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  55.00  in CPI Computer Peripherals on December 28, 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

Intertech SA Inter  vs.  CPI Computer Peripherals

Intertech SA Inter

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intertech SA Inter are ranked lower than 3 (%) 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.

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.

Pair Trading with Intertech and CPI Computer

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

The idea behind Intertech SA Inter and CPI Computer Peripherals 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.