Correlation Between Computer Age and Fairchem Organics

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

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

Diversification Opportunities for Computer Age and Fairchem Organics

0.88

Correlation Coefficient

Computer Age  Fairchem Organics

Very poor diversification

The 3 months correlation between Computer and Fairchem is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Fairchem Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairchem Organics and Computer Age 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 Computer Age Management are associated (or correlated) with Fairchem Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairchem Organics has no effect on the direction of Computer Age i.e., Computer Age and Fairchem Organics go up and down completely randomly.

Pair Corralation between Computer Age and Fairchem Organics

Assuming the 90 days trading horizon Computer Age Management is expected to generate 0.78 times more return on investment than Fairchem Organics. However, Computer Age Management is 1.28 times less risky than Fairchem Organics. It trades about 0.05 of its potential returns per unit of risk. Fairchem Organics Limited is currently generating about 0.04 per unit of risk. If you would invest  398,238  in Computer Age Management on April 20, 2025 and sell it today you would earn a total of  22,912  from holding Computer Age Management or generate 5.75% return on investment over 90 days.

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

Computer Age Management  vs.  Fairchem Organics Limited

Computer Age Management

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Computer Age may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Fairchem Organics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fairchem Organics Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Fairchem Organics is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Computer Age and Fairchem Organics

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

The idea behind Computer Age Management and Fairchem Organics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.