Correlation Between Compucom Software and METALIETF

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

Diversification Opportunities for Compucom Software and METALIETF

0.37

Correlation Coefficient

Compucom Software  METALIETF

Weak diversification

The 3 months correlation between Compucom and METALIETF is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and METALIETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METALIETF 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 METALIETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METALIETF has no effect on the direction of Compucom Software i.e., Compucom Software and METALIETF go up and down completely randomly.

Pair Corralation between Compucom Software and METALIETF

Assuming the 90 days trading horizon Compucom Software is expected to generate 1.32 times less return on investment than METALIETF. In addition to that, Compucom Software is 2.71 times more volatile than METALIETF. It trades about 0.01 of its total potential returns per unit of risk. METALIETF is currently generating about 0.04 per unit of volatility. If you would invest  919.00  in METALIETF on May 15, 2025 and sell it today you would earn a total of  19.00  from holding METALIETF or generate 2.07% return on investment over 90 days.

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

Compucom Software Limited  vs.  METALIETF

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 very healthy basic indicators, Compucom Software is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

METALIETF

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in METALIETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, METALIETF is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Compucom Software and METALIETF

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

The idea behind Compucom Software Limited and METALIETF 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.