Correlation Between Automatic Data and China Resources
Can any of the company-specific risk be diversified away by investing in both Automatic Data and China Resources 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 China Resources 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 China Resources Beer, you can compare the effects of market volatilities on Automatic Data and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and China Resources.
Diversification Opportunities for Automatic Data and China Resources
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and China is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Automatic Data i.e., Automatic Data and China Resources go up and down completely randomly.
Pair Corralation between Automatic Data and China Resources
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.49 times more return on investment than China Resources. However, Automatic Data Processing is 2.05 times less risky than China Resources. It trades about -0.01 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.23 per unit of risk. If you would invest 28,305 in Automatic Data Processing on October 17, 2024 and sell it today you would lose (105.00) from holding Automatic Data Processing or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. China Resources Beer
Performance |
| Timeline |
| Automatic Data Processing |
| China Resources Beer |
Automatic Data and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and China Resources
The main advantage of trading using opposite Automatic Data and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Automatic Data vs. Meiko Electronics Co | Automatic Data vs. CompuGroup Medical SE | Automatic Data vs. Canon Marketing Japan | Automatic Data vs. FLOW TRADERS LTD |
| China Resources vs. Automatic Data Processing | China Resources vs. Molina Healthcare | China Resources vs. US Physical Therapy | China Resources vs. SILVER BULLET DATA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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