Correlation Between Computer Age and Royal Orchid

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

Diversification Opportunities for Computer Age and Royal Orchid

0.55

Correlation Coefficient

Computer Age  Royal Orchid

Very weak diversification

The 3 months correlation between Computer and Royal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Royal Orchid Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Orchid 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 Royal Orchid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Orchid Hotels has no effect on the direction of Computer Age i.e., Computer Age and Royal Orchid go up and down completely randomly.

Pair Corralation between Computer Age and Royal Orchid

Assuming the 90 days trading horizon Computer Age is expected to generate 2.05 times less return on investment than Royal Orchid. In addition to that, Computer Age is 1.05 times more volatile than Royal Orchid Hotels. It trades about 0.04 of its total potential returns per unit of risk. Royal Orchid Hotels is currently generating about 0.09 per unit of volatility. If you would invest  39,795  in Royal Orchid Hotels on April 23, 2025 and sell it today you would earn a total of  3,985  from holding Royal Orchid Hotels or generate 10.01% return on investment over 90 days.

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

Computer Age Management  vs.  Royal Orchid 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 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Computer Age is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Royal Orchid Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Orchid Hotels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile essential indicators, Royal Orchid may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Computer Age and Royal Orchid

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

The idea behind Computer Age Management and Royal Orchid 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.