Correlation Between HCL Technologies and Computer Age

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

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

Diversification Opportunities for HCL Technologies and Computer Age

0.39

Correlation Coefficient

HCL Technologies  Computer Age

Weak diversification

The 3 months correlation between HCL and Computer is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding HCL Technologies Limited and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and HCL Technologies 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 HCL Technologies Limited are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of HCL Technologies i.e., HCL Technologies and Computer Age go up and down completely randomly.

Pair Corralation between HCL Technologies and Computer Age

Assuming the 90 days trading horizon HCL Technologies Limited is expected to generate 0.81 times more return on investment than Computer Age. However, HCL Technologies Limited is 1.23 times less risky than Computer Age. It trades about 0.07 of its potential returns per unit of risk. Computer Age Management is currently generating about 0.05 per unit of risk. If you would invest  144,977  in HCL Technologies Limited on April 21, 2025 and sell it today you would earn a total of  9,903  from holding HCL Technologies Limited or generate 6.83% return on investment over 90 days.

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

HCL Technologies Limited  vs.  Computer Age Management

HCL Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HCL Technologies Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, HCL Technologies may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Computer Age Management

Risk-Adjusted Performance

Insignificant

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

Pair Trading with HCL Technologies and Computer Age

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

The idea behind HCL Technologies Limited and Computer Age Management 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.