Correlation Between Savannah Resources and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Savannah Resources and Automatic Data 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 Savannah Resources and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Savannah Resources Plc and Automatic Data Processing, you can compare the effects of market volatilities on Savannah Resources and Automatic Data 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 Savannah Resources with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Savannah Resources and Automatic Data.
Diversification Opportunities for Savannah Resources and Automatic Data
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Savannah and Automatic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Savannah Resources Plc and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and Savannah Resources 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 Savannah Resources Plc are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Savannah Resources i.e., Savannah Resources and Automatic Data go up and down completely randomly.
Pair Corralation between Savannah Resources and Automatic Data
Assuming the 90 days trading horizon Savannah Resources Plc is expected to generate 1.33 times more return on investment than Automatic Data. However, Savannah Resources is 1.33 times more volatile than Automatic Data Processing. It trades about 0.13 of its potential returns per unit of risk. Automatic Data Processing is currently generating about -0.1 per unit of risk. If you would invest 405.00 in Savannah Resources Plc on September 14, 2024 and sell it today you would earn a total of 16.00 from holding Savannah Resources Plc or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Savannah Resources Plc vs. Automatic Data Processing
Performance |
| Timeline |
| Savannah Resources Plc |
| Automatic Data Processing |
Savannah Resources and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Savannah Resources and Automatic Data
The main advantage of trading using opposite Savannah Resources and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Savannah Resources position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Savannah Resources vs. JB Hunt Transport | Savannah Resources vs. Various Eateries PLC | Savannah Resources vs. Zoom Video Communications | Savannah Resources vs. Gaztransport et Technigaz |
| Automatic Data vs. Samsung Electronics Co | Automatic Data vs. Samsung Electronics Co | Automatic Data vs. Hyundai Motor | Automatic Data vs. Reliance Industries Ltd |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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