Correlation Between Mangalam Organics and Computer Age

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

By analyzing existing cross correlation between Mangalam Organics Limited and Computer Age Management, you can compare the effects of market volatilities on Mangalam Organics and Computer Age 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 Mangalam Organics with a short position of Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mangalam Organics and Computer Age.

Diversification Opportunities for Mangalam Organics and Computer Age

-0.44

Correlation Coefficient

Mangalam Organics  Computer Age

Very good diversification

The 3 months correlation between Mangalam and Computer is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Mangalam Organics Limited and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and Mangalam Organics 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 Mangalam Organics Limited are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of Mangalam Organics i.e., Mangalam Organics and Computer Age go up and down completely randomly.

Pair Corralation between Mangalam Organics and Computer Age

Assuming the 90 days trading horizon Mangalam Organics Limited is expected to generate 1.06 times more return on investment than Computer Age. However, Mangalam Organics is 1.06 times more volatile than Computer Age Management. It trades about -0.04 of its potential returns per unit of risk. Computer Age Management is currently generating about -0.24 per unit of risk. If you would invest  43,020  in Mangalam Organics Limited on October 21, 2024 and sell it today you would lose (1,090) from holding Mangalam Organics Limited or give up 2.53% of portfolio value over 90 days.

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

Mangalam Organics Limited  vs.  Computer Age Management

Mangalam Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangalam Organics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Computer Age Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer Age Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Computer Age is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mangalam Organics and Computer Age

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

The idea behind Mangalam Organics Limited and Computer Age Management 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.