Correlation Between Automatic Data and Edita Food
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Edita Food 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 Automatic Data and Edita Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Edita Food Industries, you can compare the effects of market volatilities on Automatic Data and Edita Food 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 Automatic Data with a short position of Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Edita Food.
Diversification Opportunities for Automatic Data and Edita Food
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and Edita is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries and Automatic Data 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 Automatic Data Processing are associated (or correlated) with Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Automatic Data i.e., Automatic Data and Edita Food go up and down completely randomly.
Pair Corralation between Automatic Data and Edita Food
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.23 times more return on investment than Edita Food. However, Automatic Data Processing is 4.32 times less risky than Edita Food. It trades about 0.17 of its potential returns per unit of risk. Edita Food Industries is currently generating about -0.21 per unit of risk. If you would invest 28,961 in Automatic Data Processing on August 24, 2024 and sell it today you would earn a total of 1,417 from holding Automatic Data Processing or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Edita Food Industries
Performance |
| Timeline |
| Automatic Data Processing |
| Edita Food Industries |
Automatic Data and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Edita Food
The main advantage of trading using opposite Automatic Data and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| Automatic Data vs. Hochschild Mining plc | Automatic Data vs. Thor Mining PLC | Automatic Data vs. Atalaya Mining | Automatic Data vs. Melia Hotels |
| Edita Food vs. Endeavour Mining Corp | Edita Food vs. Blackrock World Mining | Edita Food vs. Global Net Lease | Edita Food vs. Anglesey Mining |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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