Correlation Between Computer Age and Selan Exploration

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

Diversification Opportunities for Computer Age and Selan Exploration

0.75

Correlation Coefficient

Computer Age  Selan Exploration

Poor diversification

The 3 months correlation between Computer and Selan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Selan Exploration Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selan Exploration 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 Selan Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selan Exploration has no effect on the direction of Computer Age i.e., Computer Age and Selan Exploration go up and down completely randomly.

Pair Corralation between Computer Age and Selan Exploration

Assuming the 90 days trading horizon Computer Age is expected to generate 2.16 times less return on investment than Selan Exploration. But when comparing it to its historical volatility, Computer Age Management is 1.29 times less risky than Selan Exploration. It trades about 0.05 of its potential returns per unit of risk. Selan Exploration Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  57,845  in Selan Exploration Technology on April 22, 2025 and sell it today you would earn a total of  7,720  from holding Selan Exploration Technology or generate 13.35% 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.  Selan Exploration Technology

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.

Selan Exploration

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Selan Exploration Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Selan Exploration displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer Age and Selan Exploration

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

The idea behind Computer Age Management and Selan Exploration Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.