Correlation Between SCI AG and Automatic Data
Can any of the company-specific risk be diversified away by investing in both SCI AG 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 SCI AG and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI AG and Automatic Data Processing, you can compare the effects of market volatilities on SCI AG 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 SCI AG with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI AG and Automatic Data.
Diversification Opportunities for SCI AG and Automatic Data
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCI and Automatic is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SCI AG 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 SCI AG 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 SCI AG 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 SCI AG i.e., SCI AG and Automatic Data go up and down completely randomly.
Pair Corralation between SCI AG and Automatic Data
Assuming the 90 days trading horizon SCI AG is expected to generate 2.33 times less return on investment than Automatic Data. In addition to that, SCI AG is 1.83 times more volatile than Automatic Data Processing. It trades about 0.01 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.05 per unit of volatility. If you would invest 21,593 in Automatic Data Processing on September 14, 2024 and sell it today you would earn a total of 7,097 from holding Automatic Data Processing or generate 32.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI AG vs. Automatic Data Processing
Performance |
| Timeline |
| SCI AG |
| Automatic Data Processing |
SCI AG and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI AG and Automatic Data
The main advantage of trading using opposite SCI AG and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI AG 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.| SCI AG vs. Automatic Data Processing | SCI AG vs. COMMERCIAL VEHICLE | SCI AG vs. Public Storage | SCI AG vs. INTER CARS SA |
| Automatic Data vs. FEMALE HEALTH | Automatic Data vs. Liberty Broadband | Automatic Data vs. Broadridge Financial Solutions | Automatic Data vs. YOOMA WELLNESS INC |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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