Correlation Between Automatic Data and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both Automatic Data and PPHE HOTEL 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 PPHE HOTEL 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 PPHE HOTEL GROUP, you can compare the effects of market volatilities on Automatic Data and PPHE HOTEL 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 PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and PPHE HOTEL.
Diversification Opportunities for Automatic Data and PPHE HOTEL
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Automatic and PPHE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP 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 PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of Automatic Data i.e., Automatic Data and PPHE HOTEL go up and down completely randomly.
Pair Corralation between Automatic Data and PPHE HOTEL
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.64 times more return on investment than PPHE HOTEL. However, Automatic Data Processing is 1.56 times less risky than PPHE HOTEL. It trades about 0.13 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about -0.14 per unit of risk. If you would invest 28,195 in Automatic Data Processing on November 6, 2024 and sell it today you would earn a total of 1,020 from holding Automatic Data Processing or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Automatic Data Processing vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| Automatic Data Processing |
| PPHE HOTEL GROUP |
Automatic Data and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and PPHE HOTEL
The main advantage of trading using opposite Automatic Data and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, PPHE HOTEL 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.| Automatic Data vs. Goosehead Insurance | Automatic Data vs. INSURANCE AUST GRP | Automatic Data vs. Insurance Australia Group | Automatic Data vs. Siamgas And Petrochemicals |
| PPHE HOTEL vs. ATRESMEDIA | PPHE HOTEL vs. GigaMedia | PPHE HOTEL vs. ANTA SPORTS PRODUCT | PPHE HOTEL vs. Universal Entertainment |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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