Correlation Between Automatic Data and CeoTronics
Can any of the company-specific risk be diversified away by investing in both Automatic Data and CeoTronics 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 CeoTronics 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 CeoTronics AG, you can compare the effects of market volatilities on Automatic Data and CeoTronics 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 CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and CeoTronics.
Diversification Opportunities for Automatic Data and CeoTronics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automatic and CeoTronics is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG 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 CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Automatic Data i.e., Automatic Data and CeoTronics go up and down completely randomly.
Pair Corralation between Automatic Data and CeoTronics
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.43 times more return on investment than CeoTronics. However, Automatic Data Processing is 2.3 times less risky than CeoTronics. It trades about 0.15 of its potential returns per unit of risk. CeoTronics AG is currently generating about 0.01 per unit of risk. If you would invest 22,793 in Automatic Data Processing on September 19, 2024 and sell it today you would earn a total of 5,437 from holding Automatic Data Processing or generate 23.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Automatic Data Processing vs. CeoTronics AG
Performance |
| Timeline |
| Automatic Data Processing |
| CeoTronics AG |
Automatic Data and CeoTronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and CeoTronics
The main advantage of trading using opposite Automatic Data and CeoTronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, CeoTronics 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 CeoTronics will offset losses from the drop in CeoTronics' long position.| Automatic Data vs. Insurance Australia Group | Automatic Data vs. National Storage Affiliates | Automatic Data vs. Goosehead Insurance | Automatic Data vs. Selective Insurance Group |
| CeoTronics vs. Ryanair Holdings plc | CeoTronics vs. Automatic Data Processing | CeoTronics vs. National Storage Affiliates | CeoTronics vs. SEALED AIR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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