Correlation Between Computer Modelling and China Power

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

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

Diversification Opportunities for Computer Modelling and China Power

0.14

Correlation Coefficient

Computer Modelling  China Power

Average diversification

The 3 months correlation between Computer and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group and China Power Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Power Equipment and Computer Modelling 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 Modelling Group are associated (or correlated) with China Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Power Equipment has no effect on the direction of Computer Modelling i.e., Computer Modelling and China Power go up and down completely randomly.

Pair Corralation between Computer Modelling and China Power

Assuming the 90 days horizon Computer Modelling Group is expected to under-perform the China Power. But the pink sheet apears to be less risky and, when comparing its historical volatility, Computer Modelling Group is 30.22 times less risky than China Power. The pink sheet trades about -0.06 of its potential returns per unit of risk. The China Power Equipment is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.52  in China Power Equipment on May 13, 2025 and sell it today you would earn a total of  0.00  from holding China Power Equipment or generate 0.0% return on investment over 90 days.

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

Computer Modelling Group  vs.  China Power Equipment

Computer Modelling

Risk-Adjusted Performance

Weakest

Over the last 90 days Computer Modelling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

China Power Equipment

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in China Power Equipment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, China Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer Modelling and China Power

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

The idea behind Computer Modelling Group and China Power Equipment 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..