Correlation Between Armada Mercantile and Woodbrook Group

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

By analyzing existing cross correlation between Armada Mercantile and Woodbrook Group Holdings, you can compare the effects of market volatilities on Armada Mercantile and Woodbrook Group 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 Mercantile with a short position of Woodbrook Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Mercantile and Woodbrook Group.

Diversification Opportunities for Armada Mercantile and Woodbrook Group

0.0

Correlation Coefficient

Armada Mercantile  Woodbrook Group

Pay attention - limited upside

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

Pair Corralation between Armada Mercantile and Woodbrook Group

Assuming the 90 days horizon Armada Mercantile is expected to generate 8.58 times less return on investment than Woodbrook Group. But when comparing it to its historical volatility, Armada Mercantile is 4.63 times less risky than Woodbrook Group. It trades about 0.07 of its potential returns per unit of risk. Woodbrook Group Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5.12  in Woodbrook Group Holdings on December 2, 2024 and sell it today you would earn a total of  0.88  from holding Woodbrook Group Holdings or generate 17.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Armada Mercantile  vs.  Woodbrook Group Holdings

Armada Mercantile

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Mercantile are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Armada Mercantile reported solid returns over the last few months and may actually be approaching a breakup point.

Woodbrook Group Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woodbrook Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Woodbrook Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Mercantile and Woodbrook Group

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

The idea behind Armada Mercantile and Woodbrook Group Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.