Correlation Between Power Mech and Computer Age

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

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

Diversification Opportunities for Power Mech and Computer Age

-0.31

Correlation Coefficient

Power Mech  Computer Age

Very good diversification

The 3 months correlation between Power and Computer is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Power Mech Projects 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 Power Mech 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 Power Mech Projects 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 Power Mech i.e., Power Mech and Computer Age go up and down completely randomly.

Pair Corralation between Power Mech and Computer Age

Assuming the 90 days trading horizon Power Mech Projects is expected to generate 2.78 times more return on investment than Computer Age. However, Power Mech is 2.78 times more volatile than Computer Age Management. It trades about 0.06 of its potential returns per unit of risk. Computer Age Management is currently generating about 0.09 per unit of risk. If you would invest  91,072  in Power Mech Projects on October 3, 2024 and sell it today you would earn a total of  165,933  from holding Power Mech Projects or generate 182.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.36%
Values	Daily Returns

Power Mech Projects  vs.  Computer Age Management

Power Mech Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Mech Projects has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Computer Age Management

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Computer Age unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Power Mech and Computer Age

The main advantage of trading using opposite Power Mech and Computer Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Mech 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 Power Mech Projects 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.