Correlation Between Compucom Software and Sterling

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

Diversification Opportunities for Compucom Software and Sterling

0.51

Correlation Coefficient

Compucom Software  Sterling

Very weak diversification

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

Pair Corralation between Compucom Software and Sterling

Assuming the 90 days trading horizon Compucom Software Limited is expected to generate 0.96 times more return on investment than Sterling. However, Compucom Software Limited is 1.05 times less risky than Sterling. It trades about 0.08 of its potential returns per unit of risk. Sterling and Wilson is currently generating about 0.03 per unit of risk. If you would invest  1,954  in Compucom Software Limited on April 21, 2025 and sell it today you would earn a total of  237.00  from holding Compucom Software Limited or generate 12.13% 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.  Sterling and Wilson

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.

Sterling and Wilson

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling and Wilson are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Sterling is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Compucom Software and Sterling

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

The idea behind Compucom Software Limited and Sterling and Wilson 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.