Correlation Between Compucom Software and Indian Metals

Can any of the company-specific risk be diversified away by investing in both Compucom Software and Indian Metals 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 Indian Metals 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 Indian Metals Ferro, you can compare the effects of market volatilities on Compucom Software and Indian Metals 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 Indian Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compucom Software and Indian Metals.

Diversification Opportunities for Compucom Software and Indian Metals

-0.39

Correlation Coefficient

Compucom Software  Indian Metals

Very good diversification

The 3 months correlation between Compucom and Indian is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Indian Metals Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Metals Ferro 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 Indian Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Metals Ferro has no effect on the direction of Compucom Software i.e., Compucom Software and Indian Metals go up and down completely randomly.

Pair Corralation between Compucom Software and Indian Metals

Assuming the 90 days trading horizon Compucom Software Limited is expected to under-perform the Indian Metals. In addition to that, Compucom Software is 1.09 times more volatile than Indian Metals Ferro. It trades about -0.06 of its total potential returns per unit of risk. Indian Metals Ferro is currently generating about 0.24 per unit of volatility. If you would invest  62,460  in Indian Metals Ferro on May 27, 2025 and sell it today you would earn a total of  24,115  from holding Indian Metals Ferro or generate 38.61% return on investment over 90 days.

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

Compucom Software Limited  vs.  Indian Metals Ferro

Compucom Software

Risk-Adjusted Performance

Weakest

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Indian Metals Ferro

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Metals Ferro are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indian Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compucom Software and Indian Metals

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

The idea behind Compucom Software Limited and Indian Metals Ferro 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.