Correlation Between COMPUTERSHARE and BP Prudhoe

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

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

Diversification Opportunities for COMPUTERSHARE and BP Prudhoe

0.07

Correlation Coefficient

COMPUTERSHARE  BP Prudhoe

Significant diversification

The 3 months correlation between COMPUTERSHARE and BMI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding COMPUTERSHARE and BP Prudhoe Bay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Prudhoe Bay and COMPUTERSHARE 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 COMPUTERSHARE are associated (or correlated) with BP Prudhoe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Prudhoe Bay has no effect on the direction of COMPUTERSHARE i.e., COMPUTERSHARE and BP Prudhoe go up and down completely randomly.

Pair Corralation between COMPUTERSHARE and BP Prudhoe

Assuming the 90 days trading horizon COMPUTERSHARE is expected to generate 0.28 times more return on investment than BP Prudhoe. However, COMPUTERSHARE is 3.55 times less risky than BP Prudhoe. It trades about 0.1 of its potential returns per unit of risk. BP Prudhoe Bay is currently generating about 0.0 per unit of risk. If you would invest  2,100  in COMPUTERSHARE on April 22, 2025 and sell it today you would earn a total of  200.00  from holding COMPUTERSHARE or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

COMPUTERSHARE  vs.  BP Prudhoe Bay

COMPUTERSHARE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTERSHARE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, COMPUTERSHARE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

BP Prudhoe Bay

Risk-Adjusted Performance

Very Weak

Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BP Prudhoe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with COMPUTERSHARE and BP Prudhoe

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

The idea behind COMPUTERSHARE and BP Prudhoe Bay 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.