Correlation Between Compucom Software and Eros International

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

By analyzing existing cross correlation between Compucom Software Limited and Eros International Media, you can compare the effects of market volatilities on Compucom Software and Eros International 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 Compucom Software with a short position of Eros International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compucom Software and Eros International.

Diversification Opportunities for Compucom Software and Eros International

0.49

Correlation Coefficient

Compucom Software  Eros International

Very weak diversification

The 3 months correlation between Compucom and Eros is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Eros International Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros International Media and Compucom Software 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 Compucom Software Limited are associated (or correlated) with Eros International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros International Media has no effect on the direction of Compucom Software i.e., Compucom Software and Eros International go up and down completely randomly.

Pair Corralation between Compucom Software and Eros International

Assuming the 90 days trading horizon Compucom Software Limited is expected to under-perform the Eros International. In addition to that, Compucom Software is 1.53 times more volatile than Eros International Media. It trades about 0.0 of its total potential returns per unit of risk. Eros International Media is currently generating about 0.25 per unit of volatility. If you would invest  599.00  in Eros International Media on April 29, 2025 and sell it today you would earn a total of  182.00  from holding Eros International Media or generate 30.38% return on investment over 90 days.

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

Compucom Software Limited  vs.  Eros International Media

Compucom Software

Risk-Adjusted Performance

Weak

Over the last 90 days Compucom Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Compucom Software is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Eros International Media

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eros International Media are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Eros International exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compucom Software and Eros International

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

The idea behind Compucom Software Limited and Eros International Media 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.