Correlation Between Compucom Software and Samhi Hotels

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

Diversification Opportunities for Compucom Software and Samhi Hotels

0.65

Correlation Coefficient

Compucom Software  Samhi Hotels

Poor diversification

The 3 months correlation between Compucom and Samhi is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited 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 Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of Compucom Software i.e., Compucom Software and Samhi Hotels go up and down completely randomly.

Pair Corralation between Compucom Software and Samhi Hotels

Assuming the 90 days trading horizon Compucom Software is expected to generate 2.03 times less return on investment than Samhi Hotels. In addition to that, Compucom Software is 1.25 times more volatile than Samhi Hotels Limited. It trades about 0.09 of its total potential returns per unit of risk. Samhi Hotels Limited is currently generating about 0.22 per unit of volatility. If you would invest  18,017  in Samhi Hotels Limited on April 25, 2025 and sell it today you would earn a total of  6,041  from holding Samhi Hotels Limited or generate 33.53% return on investment over 90 days.

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

Compucom Software Limited  vs.  Samhi Hotels Limited

Compucom Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compucom Software Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Compucom Software displayed solid returns over the last few months and may actually be approaching a breakup point.

Samhi Hotels Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Samhi Hotels Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Samhi Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compucom Software and Samhi Hotels

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

The idea behind Compucom Software Limited and Samhi Hotels Limited 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.