Correlation Between Automatic Data and Nisshin Seifun

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

Diversification Opportunities for Automatic Data and Nisshin Seifun

0.08

Correlation Coefficient

Automatic Data  Nisshin Seifun

Significant diversification

The 3 months correlation between Automatic and Nisshin is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Nisshin Seifun Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nisshin Seifun Group 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 Nisshin Seifun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nisshin Seifun Group has no effect on the direction of Automatic Data i.e., Automatic Data and Nisshin Seifun go up and down completely randomly.

Pair Corralation between Automatic Data and Nisshin Seifun

Assuming the 90 days horizon Automatic Data Processing is expected to under-perform the Nisshin Seifun. But the stock apears to be less risky and, when comparing its historical volatility, Automatic Data Processing is 1.35 times less risky than Nisshin Seifun. The stock trades about -0.14 of its potential returns per unit of risk. The Nisshin Seifun Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,110  in Nisshin Seifun Group on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Nisshin Seifun Group or generate 0.0% return on investment over 90 days.

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

Automatic Data Processing  vs.  Nisshin Seifun Group

Automatic Data Processing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Automatic Data may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nisshin Seifun Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nisshin Seifun Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nisshin Seifun is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Automatic Data and Nisshin Seifun

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

The idea behind Automatic Data Processing and Nisshin Seifun Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..