Correlation Between Automatic Data and Qingling Motors

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

Diversification Opportunities for Automatic Data and Qingling Motors

-0.01

Correlation Coefficient

Automatic Data  Qingling Motors

Good diversification

The 3 months correlation between Automatic and Qingling is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Qingling Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingling Motors 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 Qingling Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingling Motors has no effect on the direction of Automatic Data i.e., Automatic Data and Qingling Motors go up and down completely randomly.

Pair Corralation between Automatic Data and Qingling Motors

Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.49 times more return on investment than Qingling Motors. However, Automatic Data Processing is 2.05 times less risky than Qingling Motors. It trades about 0.13 of its potential returns per unit of risk. Qingling Motors Co is currently generating about 0.0 per unit of risk. If you would invest  26,158  in Automatic Data Processing on October 10, 2024 and sell it today you would earn a total of  2,182  from holding Automatic Data Processing or generate 8.34% return on investment over 90 days.

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

Automatic Data Processing  vs.  Qingling Motors Co

Automatic Data Processing

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 10 (%) 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 February 2025.

Qingling Motors

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Automatic Data and Qingling Motors

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

The idea behind Automatic Data Processing and Qingling Motors Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.