Correlation Between Zodiac Clothing and Compucom Software

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

By analyzing existing cross correlation between Zodiac Clothing and Compucom Software Limited, you can compare the effects of market volatilities on Zodiac Clothing and Compucom Software 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 Zodiac Clothing with a short position of Compucom Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zodiac Clothing and Compucom Software.

Diversification Opportunities for Zodiac Clothing and Compucom Software

0.28

Correlation Coefficient

Zodiac Clothing  Compucom Software

Modest diversification

The 3 months correlation between Zodiac and Compucom is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Zodiac Clothing and Compucom Software Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compucom Software and Zodiac Clothing 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 Zodiac Clothing are associated (or correlated) with Compucom Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compucom Software has no effect on the direction of Zodiac Clothing i.e., Zodiac Clothing and Compucom Software go up and down completely randomly.

Pair Corralation between Zodiac Clothing and Compucom Software

Assuming the 90 days trading horizon Zodiac Clothing is expected to generate 0.74 times more return on investment than Compucom Software. However, Zodiac Clothing is 1.35 times less risky than Compucom Software. It trades about 0.01 of its potential returns per unit of risk. Compucom Software Limited is currently generating about 0.01 per unit of risk. If you would invest  13,540  in Zodiac Clothing on October 5, 2024 and sell it today you would lose (108.00) from holding Zodiac Clothing or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.18%
Values	Daily Returns

Zodiac Clothing  vs.  Compucom Software Limited

Zodiac Clothing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zodiac Clothing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Zodiac Clothing disclosed solid returns over the last few months and may actually be approaching a breakup point.

Compucom Software

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compucom Software Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Compucom Software is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zodiac Clothing and Compucom Software

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

The idea behind Zodiac Clothing and Compucom Software Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.