Correlation Between Computer Age and Garware Hi

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Can any of the company-specific risk be diversified away by investing in both Computer Age and Garware Hi 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 Garware Hi 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 Garware Hi Tech Films, you can compare the effects of market volatilities on Computer Age and Garware Hi 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 Garware Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Age and Garware Hi.

Diversification Opportunities for Computer Age and Garware Hi

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Computer and Garware is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Garware Hi Tech Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Hi Tech 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 Garware Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Hi Tech has no effect on the direction of Computer Age i.e., Computer Age and Garware Hi go up and down completely randomly.

Pair Corralation between Computer Age and Garware Hi

Assuming the 90 days trading horizon Computer Age is expected to generate 2.75 times less return on investment than Garware Hi. But when comparing it to its historical volatility, Computer Age Management is 1.65 times less risky than Garware Hi. It trades about 0.14 of its potential returns per unit of risk. Garware Hi Tech Films is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  252,870  in Garware Hi Tech Films on April 8, 2025 and sell it today you would earn a total of  149,870  from holding Garware Hi Tech Films or generate 59.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Computer Age Management  vs.  Garware Hi Tech Films

 Performance 
       Timeline  
Computer Age Management 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 11 (%) 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.
Garware Hi Tech 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Computer Age and Garware Hi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Computer Age and Garware Hi

The main advantage of trading using opposite Computer Age and Garware Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Age position performs unexpectedly, Garware Hi 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 Garware Hi will offset losses from the drop in Garware Hi's long position.
The idea behind Computer Age Management and Garware Hi Tech Films 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.
Check out your portfolio center.
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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