Correlation Between Computer Direct and Buff Technologies

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

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

Diversification Opportunities for Computer Direct and Buff Technologies

0.7

Correlation Coefficient

Computer Direct  Buff Technologies

Poor diversification

The 3 months correlation between Computer and Buff is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Computer Direct and Buff Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buff Technologies and Computer Direct 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 Direct are associated (or correlated) with Buff Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buff Technologies has no effect on the direction of Computer Direct i.e., Computer Direct and Buff Technologies go up and down completely randomly.

Pair Corralation between Computer Direct and Buff Technologies

Assuming the 90 days trading horizon Computer Direct is expected to generate 0.78 times more return on investment than Buff Technologies. However, Computer Direct is 1.28 times less risky than Buff Technologies. It trades about 0.12 of its potential returns per unit of risk. Buff Technologies is currently generating about 0.04 per unit of risk. If you would invest  3,981,121  in Computer Direct on May 14, 2025 and sell it today you would earn a total of  545,879  from holding Computer Direct or generate 13.71% return on investment over 90 days.

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

Computer Direct  vs.  Buff Technologies

Computer Direct

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Direct are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Computer Direct sustained solid returns over the last few months and may actually be approaching a breakup point.

Buff Technologies

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Buff Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Buff Technologies may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Computer Direct and Buff Technologies

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

The idea behind Computer Direct and Buff Technologies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..