Correlation Between Computer Age and Meghmani Organics

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

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

Diversification Opportunities for Computer Age and Meghmani Organics

0.79

Correlation Coefficient

Computer Age  Meghmani Organics

Poor diversification

The 3 months correlation between Computer and Meghmani is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management and Meghmani Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meghmani Organics and Computer Age 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 Computer Age Management are associated (or correlated) with Meghmani Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meghmani Organics has no effect on the direction of Computer Age i.e., Computer Age and Meghmani Organics go up and down completely randomly.

Pair Corralation between Computer Age and Meghmani Organics

Assuming the 90 days trading horizon Computer Age Management is expected to under-perform the Meghmani Organics. But the stock apears to be less risky and, when comparing its historical volatility, Computer Age Management is 1.19 times less risky than Meghmani Organics. The stock trades about -0.02 of its potential returns per unit of risk. The Meghmani Organics Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7,285  in Meghmani Organics Limited on May 4, 2025 and sell it today you would earn a total of  2,152  from holding Meghmani Organics Limited or generate 29.54% return on investment over 90 days.

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

Computer Age Management  vs.  Meghmani Organics Limited

Computer Age Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Computer Age Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Computer Age is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Meghmani Organics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Meghmani Organics Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Meghmani Organics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer Age and Meghmani Organics

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

The idea behind Computer Age Management and Meghmani Organics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.