Correlation Between Autocorp Holding and President Bakery

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

By analyzing existing cross correlation between Autocorp Holding Public and President Bakery Public, you can compare the effects of market volatilities on Autocorp Holding and President Bakery 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 Autocorp Holding with a short position of President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autocorp Holding and President Bakery.

Diversification Opportunities for Autocorp Holding and President Bakery

-0.33

Correlation Coefficient

Autocorp Holding  President Bakery

Very good diversification

The 3 months correlation between Autocorp and President is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Autocorp Holding Public and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery Public and Autocorp Holding 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 Autocorp Holding Public are associated (or correlated) with President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of Autocorp Holding i.e., Autocorp Holding and President Bakery go up and down completely randomly.

Pair Corralation between Autocorp Holding and President Bakery

Assuming the 90 days trading horizon Autocorp Holding Public is expected to under-perform the President Bakery. In addition to that, Autocorp Holding is 2.32 times more volatile than President Bakery Public. It trades about -0.24 of its total potential returns per unit of risk. President Bakery Public is currently generating about 0.05 per unit of volatility. If you would invest  5,850  in President Bakery Public on October 11, 2024 and sell it today you would earn a total of  125.00  from holding President Bakery Public or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Autocorp Holding Public  vs.  President Bakery Public

Autocorp Holding Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autocorp Holding Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

President Bakery Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in President Bakery Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, President Bakery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Autocorp Holding and President Bakery

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

The idea behind Autocorp Holding Public and President Bakery Public 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.