Correlation Between Compucom Software and Southern Petrochemicals

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

Diversification Opportunities for Compucom Software and Southern Petrochemicals

0.33

Correlation Coefficient

Compucom Software  Southern Petrochemicals

Weak diversification

The 3 months correlation between Compucom and Southern is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software Limited and Southern Petrochemicals Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Petrochemicals 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 Southern Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Petrochemicals has no effect on the direction of Compucom Software i.e., Compucom Software and Southern Petrochemicals go up and down completely randomly.

Pair Corralation between Compucom Software and Southern Petrochemicals

Assuming the 90 days trading horizon Compucom Software is expected to generate 2.45 times less return on investment than Southern Petrochemicals. In addition to that, Compucom Software is 1.09 times more volatile than Southern Petrochemicals Industries. It trades about 0.04 of its total potential returns per unit of risk. Southern Petrochemicals Industries is currently generating about 0.1 per unit of volatility. If you would invest  8,014  in Southern Petrochemicals Industries on May 6, 2025 and sell it today you would earn a total of  1,264  from holding Southern Petrochemicals Industries or generate 15.77% 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.  Southern Petrochemicals Indust

Compucom Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compucom Software Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Compucom Software may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Southern Petrochemicals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Petrochemicals Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Southern Petrochemicals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compucom Software and Southern Petrochemicals

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

The idea behind Compucom Software Limited and Southern Petrochemicals Industries 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.