Correlation Between Armada Hflr and International Company

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Can any of the company-specific risk be diversified away by investing in both Armada Hflr and International Company 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 Armada Hflr and International Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and International Company For, you can compare the effects of market volatilities on Armada Hflr and International Company 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 Armada Hflr with a short position of International Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and International Company.

Diversification Opportunities for Armada Hflr and International Company

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Armada and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and International Company For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Company and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with International Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Company has no effect on the direction of Armada Hflr i.e., Armada Hflr and International Company go up and down completely randomly.

Pair Corralation between Armada Hflr and International Company

Considering the 90-day investment horizon Armada Hflr is expected to generate 70.06 times less return on investment than International Company. But when comparing it to its historical volatility, Armada Hflr Pr is 35.72 times less risky than International Company. It trades about 0.03 of its potential returns per unit of risk. International Company For is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,109  in International Company For on September 19, 2024 and sell it today you would lose (9.00) from holding International Company For or give up 0.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy78.62%
ValuesDaily Returns

Armada Hflr Pr  vs.  International Company For

 Performance 
       Timeline  
Armada Hflr Pr 

Risk-Adjusted Performance

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Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
International Company 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days International Company For has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, International Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Armada Hflr and International Company Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Armada Hflr and International Company

The main advantage of trading using opposite Armada Hflr and International Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, International Company 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 International Company will offset losses from the drop in International Company's long position.
The idea behind Armada Hflr Pr and International Company For pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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