Correlation Between Automatic Data and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both Automatic Data and THORNEY TECHS 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 THORNEY TECHS 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 THORNEY TECHS LTD, you can compare the effects of market volatilities on Automatic Data and THORNEY TECHS 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 THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and THORNEY TECHS.
Diversification Opportunities for Automatic Data and THORNEY TECHS
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and THORNEY is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of Automatic Data i.e., Automatic Data and THORNEY TECHS go up and down completely randomly.
Pair Corralation between Automatic Data and THORNEY TECHS
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.26 times more return on investment than THORNEY TECHS. However, Automatic Data Processing is 3.84 times less risky than THORNEY TECHS. It trades about -0.05 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about -0.03 per unit of risk. If you would invest 28,784 in Automatic Data Processing on October 12, 2024 and sell it today you would lose (649.00) from holding Automatic Data Processing or give up 2.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. THORNEY TECHS LTD
Performance |
| Timeline |
| Automatic Data Processing |
| THORNEY TECHS LTD |
Automatic Data and THORNEY TECHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and THORNEY TECHS
The main advantage of trading using opposite Automatic Data and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.| Automatic Data vs. Meli Hotels International | Automatic Data vs. ARDAGH METAL PACDL 0001 | Automatic Data vs. Jacquet Metal Service | Automatic Data vs. Perseus Mining Limited |
| THORNEY TECHS vs. ARDAGH METAL PACDL 0001 | THORNEY TECHS vs. Teradata Corp | THORNEY TECHS vs. Automatic Data Processing | THORNEY TECHS vs. Northern Data AG |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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