Correlation Between Automatic Data and China DatangRenewable
Can any of the company-specific risk be diversified away by investing in both Automatic Data and China DatangRenewable 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 DatangRenewable 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 Datang, you can compare the effects of market volatilities on Automatic Data and China DatangRenewable 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 DatangRenewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and China DatangRenewable.
Diversification Opportunities for Automatic Data and China DatangRenewable
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Automatic and China is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China DatangRenewable 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 DatangRenewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China DatangRenewable has no effect on the direction of Automatic Data i.e., Automatic Data and China DatangRenewable go up and down completely randomly.
Pair Corralation between Automatic Data and China DatangRenewable
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.32 times more return on investment than China DatangRenewable. However, Automatic Data Processing is 3.12 times less risky than China DatangRenewable. It trades about 0.32 of its potential returns per unit of risk. China Datang is currently generating about 0.07 per unit of risk. If you would invest 26,815 in Automatic Data Processing on September 1, 2024 and sell it today you would earn a total of 2,295 from holding Automatic Data Processing or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Automatic Data Processing vs. China Datang
Performance |
| Timeline |
| Automatic Data Processing |
| China DatangRenewable |
Automatic Data and China DatangRenewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and China DatangRenewable
The main advantage of trading using opposite Automatic Data and China DatangRenewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, China DatangRenewable 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 DatangRenewable will offset losses from the drop in China DatangRenewable's long position.| Automatic Data vs. Global Ship Lease | Automatic Data vs. BOSTON BEER A | Automatic Data vs. National Beverage Corp | Automatic Data vs. Digilife Technologies Limited |
| China DatangRenewable vs. GungHo Online Entertainment | China DatangRenewable vs. Algonquin Power Utilities | China DatangRenewable vs. MUTUIONLINE | China DatangRenewable vs. United Breweries Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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