Correlation Between Compucom Software and Manali Petrochemicals

Can any of the company-specific risk be diversified away by investing in both Compucom Software and Manali Petrochemicals 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 Manali Petrochemicals 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 Manali Petrochemicals Limited, you can compare the effects of market volatilities on Compucom Software and Manali Petrochemicals 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 Manali Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compucom Software and Manali Petrochemicals.

Diversification Opportunities for Compucom Software and Manali Petrochemicals

0.51

Correlation Coefficient

Compucom Software  Manali Petrochemicals

Very weak diversification

The 3 months correlation between Compucom and Manali is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Manali Petrochemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manali Petrochemicals 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 Manali Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manali Petrochemicals has no effect on the direction of Compucom Software i.e., Compucom Software and Manali Petrochemicals go up and down completely randomly.

Pair Corralation between Compucom Software and Manali Petrochemicals

Assuming the 90 days trading horizon Compucom Software is expected to generate 2.61 times less return on investment than Manali Petrochemicals. But when comparing it to its historical volatility, Compucom Software Limited is 1.17 times less risky than Manali Petrochemicals. It trades about 0.08 of its potential returns per unit of risk. Manali Petrochemicals Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,710  in Manali Petrochemicals Limited on April 20, 2025 and sell it today you would earn a total of  2,215  from holding Manali Petrochemicals Limited or generate 38.79% return on investment over 90 days.

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

Compucom Software Limited  vs.  Manali Petrochemicals Limited

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 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Compucom Software displayed solid returns over the last few months and may actually be approaching a breakup point.

Manali Petrochemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manali Petrochemicals Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Manali Petrochemicals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compucom Software and Manali Petrochemicals

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

The idea behind Compucom Software Limited and Manali Petrochemicals Limited 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.