Correlation Between Eros International and Compucom Software

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

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

Diversification Opportunities for Eros International and Compucom Software

0.47

Correlation Coefficient

Eros International  Compucom Software

Very weak diversification

The 3 months correlation between Eros and Compucom is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eros International Media and Compucom Software Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compucom Software and Eros International 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 Eros International Media are associated (or correlated) with Compucom Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compucom Software has no effect on the direction of Eros International i.e., Eros International and Compucom Software go up and down completely randomly.

Pair Corralation between Eros International and Compucom Software

Assuming the 90 days trading horizon Eros International Media is expected to generate 0.66 times more return on investment than Compucom Software. However, Eros International Media is 1.52 times less risky than Compucom Software. It trades about 0.19 of its potential returns per unit of risk. Compucom Software Limited is currently generating about 0.06 per unit of risk. If you would invest  631.00  in Eros International Media on April 22, 2025 and sell it today you would earn a total of  150.00  from holding Eros International Media or generate 23.77% return on investment over 90 days.

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

Eros International Media  vs.  Compucom Software Limited

Eros International Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eros International Media are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Eros International exhibited solid returns over the last few months and may actually be approaching a breakup point.

Compucom Software

Risk-Adjusted Performance

Insignificant

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 unsteady basic indicators, Compucom Software may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Eros International and Compucom Software

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

The idea behind Eros International Media and Compucom Software 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.