Correlation Between Computer Age and Indian Hotels

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

Diversification Opportunities for Computer Age and Indian Hotels

-0.09

Correlation Coefficient

Computer Age  Indian Hotels

Good diversification

The 3 months correlation between Computer and Indian is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and The Indian Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Hotels 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 Indian Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Hotels has no effect on the direction of Computer Age i.e., Computer Age and Indian Hotels go up and down completely randomly.

Pair Corralation between Computer Age and Indian Hotels

Assuming the 90 days trading horizon Computer Age Management is expected to generate 1.06 times more return on investment than Indian Hotels. However, Computer Age is 1.06 times more volatile than The Indian Hotels. It trades about 0.05 of its potential returns per unit of risk. The Indian Hotels is currently generating about -0.06 per unit of risk. If you would invest  398,666  in Computer Age Management on April 22, 2025 and sell it today you would earn a total of  22,484  from holding Computer Age Management or generate 5.64% return on investment over 90 days.

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

Computer Age Management  vs.  The Indian Hotels

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 abnormal basic indicators, Computer Age may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Indian Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Indian Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Computer Age and Indian Hotels

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

The idea behind Computer Age Management and The Indian Hotels 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.