Correlation Between Compucom Software and California Software

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

By analyzing existing cross correlation between Compucom Software Limited and California Software, you can compare the effects of market volatilities on Compucom Software and California Software 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 Compucom Software with a short position of California Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compucom Software and California Software.

Diversification Opportunities for Compucom Software and California Software

0.3

Correlation Coefficient

Compucom Software  California Software

Weak diversification

The 3 months correlation between Compucom and California is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and California Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Software and Compucom Software 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 Compucom Software Limited are associated (or correlated) with California Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Software has no effect on the direction of Compucom Software i.e., Compucom Software and California Software go up and down completely randomly.

Pair Corralation between Compucom Software and California Software

Assuming the 90 days trading horizon Compucom Software is expected to generate 3.9 times less return on investment than California Software. But when comparing it to its historical volatility, Compucom Software Limited is 1.14 times less risky than California Software. It trades about 0.06 of its potential returns per unit of risk. California Software is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,149  in California Software on April 24, 2025 and sell it today you would earn a total of  512.00  from holding California Software or generate 44.56% return on investment over 90 days.

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

Compucom Software Limited  vs.  California Software

Compucom Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compucom Software Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Compucom Software may actually be approaching a critical reversion point that can send shares even higher in August 2025.

California Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in California Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, California Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compucom Software and California Software

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

The idea behind Compucom Software Limited and California Software 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.