Correlation Between Computer Age and GVP Infotech

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

Diversification Opportunities for Computer Age and GVP Infotech

0.61

Correlation Coefficient

Computer Age  GVP Infotech

Poor diversification

The 3 months correlation between Computer and GVP is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and GVP Infotech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GVP Infotech Limited 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 GVP Infotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GVP Infotech Limited has no effect on the direction of Computer Age i.e., Computer Age and GVP Infotech go up and down completely randomly.

Pair Corralation between Computer Age and GVP Infotech

Assuming the 90 days trading horizon Computer Age Management is expected to generate 0.69 times more return on investment than GVP Infotech. However, Computer Age Management is 1.45 times less risky than GVP Infotech. It trades about 0.05 of its potential returns per unit of risk. GVP Infotech Limited is currently generating about 0.03 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	Significant
Accuracy	100.0%
Values	Daily Returns

Computer Age Management  vs.  GVP Infotech 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.

GVP Infotech Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GVP Infotech Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, GVP Infotech is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Computer Age and GVP Infotech

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

The idea behind Computer Age Management and GVP Infotech 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 Transaction History module to view history of all your transactions and understand their impact on performance.