Correlation Between Automatic Data and Centaur Media

Can any of the company-specific risk be diversified away by investing in both Automatic Data and Centaur Media 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 Centaur Media 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 Centaur Media, you can compare the effects of market volatilities on Automatic Data and Centaur Media 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 Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Centaur Media.

Diversification Opportunities for Automatic Data and Centaur Media

0.06

Correlation Coefficient

Automatic Data  Centaur Media

Significant diversification

The 3 months correlation between Automatic and Centaur is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Automatic Data i.e., Automatic Data and Centaur Media go up and down completely randomly.

Pair Corralation between Automatic Data and Centaur Media

Assuming the 90 days trading horizon Automatic Data is expected to generate 162.29 times less return on investment than Centaur Media. But when comparing it to its historical volatility, Automatic Data Processing is 6.22 times less risky than Centaur Media. It trades about 0.01 of its potential returns per unit of risk. Centaur Media is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,300  in Centaur Media on October 25, 2024 and sell it today you would earn a total of  650.00  from holding Centaur Media or generate 28.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Automatic Data Processing  vs.  Centaur Media

Automatic Data Processing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Automatic Data is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Centaur Media

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Centaur Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automatic Data and Centaur Media

The main advantage of trading using opposite Automatic Data and Centaur Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Centaur Media 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 Centaur Media will offset losses from the drop in Centaur Media's long position.

The idea behind Automatic Data Processing and Centaur Media 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.