Correlation Between Computer Modelling and Baylin Technologies

Can any of the company-specific risk be diversified away by investing in both Computer Modelling and Baylin Technologies 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 Modelling and Baylin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Computer Modelling Group and Baylin Technologies, you can compare the effects of market volatilities on Computer Modelling and Baylin Technologies 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 Modelling with a short position of Baylin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Modelling and Baylin Technologies.

Diversification Opportunities for Computer Modelling and Baylin Technologies

0.64

Correlation Coefficient

Computer Modelling  Baylin Technologies

Poor diversification

The 3 months correlation between Computer and Baylin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and Computer Modelling 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 Modelling Group are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of Computer Modelling i.e., Computer Modelling and Baylin Technologies go up and down completely randomly.

Pair Corralation between Computer Modelling and Baylin Technologies

Assuming the 90 days trading horizon Computer Modelling is expected to generate 1.32 times less return on investment than Baylin Technologies. But when comparing it to its historical volatility, Computer Modelling Group is 2.74 times less risky than Baylin Technologies. It trades about 0.16 of its potential returns per unit of risk. Baylin Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Baylin Technologies on April 22, 2025 and sell it today you would earn a total of  3.00  from holding Baylin Technologies or generate 12.0% return on investment over 90 days.

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

Computer Modelling Group  vs.  Baylin Technologies

Computer Modelling

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Modelling Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Computer Modelling is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Baylin Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baylin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Baylin Technologies is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Computer Modelling and Baylin Technologies

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

The idea behind Computer Modelling Group and Baylin Technologies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.