Correlation Between Chocoladefabriken and Automatic Data

Can any of the company-specific risk be diversified away by investing in both Chocoladefabriken 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 Chocoladefabriken and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chocoladefabriken Lindt Spruengli and Automatic Data Processing, you can compare the effects of market volatilities on Chocoladefabriken 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 Chocoladefabriken with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chocoladefabriken and Automatic Data.

Diversification Opportunities for Chocoladefabriken and Automatic Data

-0.58

Correlation Coefficient

Chocoladefabriken  Automatic Data

Excellent diversification

The 3 months correlation between Chocoladefabriken and Automatic is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen 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 Chocoladefabriken 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 Chocoladefabriken Lindt Spruengli 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 Chocoladefabriken i.e., Chocoladefabriken and Automatic Data go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Automatic Data

Assuming the 90 days trading horizon Chocoladefabriken is expected to generate 12.54 times less return on investment than Automatic Data. But when comparing it to its historical volatility, Chocoladefabriken Lindt Spruengli is 6.22 times less risky than Automatic Data. It trades about 0.01 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  23,593  in Automatic Data Processing on October 4, 2024 and sell it today you would earn a total of  5,298  from holding Automatic Data Processing or generate 22.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.98%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Automatic Data Processing

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Spruengli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Chocoladefabriken is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Automatic Data Processing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 2 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chocoladefabriken and Automatic Data

The main advantage of trading using opposite Chocoladefabriken and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chocoladefabriken 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.

The idea behind Chocoladefabriken Lindt Spruengli and Automatic Data Processing 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.