Correlation Between Castrol India and Computer Age

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

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

Diversification Opportunities for Castrol India and Computer Age

0.51

Correlation Coefficient

Castrol India  Computer Age

Very weak diversification

The 3 months correlation between Castrol and Computer is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Castrol India 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 Castrol India 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 Castrol India 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 Castrol India i.e., Castrol India and Computer Age go up and down completely randomly.

Pair Corralation between Castrol India and Computer Age

Assuming the 90 days trading horizon Castrol India Limited is expected to under-perform the Computer Age. But the stock apears to be less risky and, when comparing its historical volatility, Castrol India Limited is 1.33 times less risky than Computer Age. The stock trades about -0.11 of its potential returns per unit of risk. The Computer Age Management is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  409,667  in Computer Age Management on July 14, 2025 and sell it today you would lose (23,587) from holding Computer Age Management or give up 5.76% of portfolio value over 90 days.

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

Castrol India Limited  vs.  Computer Age Management

Castrol India Limited

Risk-Adjusted Performance

Weakest

Over the last 90 days Castrol India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Computer Age Management

Risk-Adjusted Performance

Weakest

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Castrol India and Computer Age

The main advantage of trading using opposite Castrol India and Computer Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castrol India 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 Castrol India 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.