Correlation Between Automatic Data and Kanzhun

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

Diversification Opportunities for Automatic Data and Kanzhun

0.04

Correlation Coefficient

Automatic Data  Kanzhun

Significant diversification

The 3 months correlation between Automatic and Kanzhun is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Kanzhun Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kanzhun Ltd ADR 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 Kanzhun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kanzhun Ltd ADR has no effect on the direction of Automatic Data i.e., Automatic Data and Kanzhun go up and down completely randomly.

Pair Corralation between Automatic Data and Kanzhun

Considering the 90-day investment horizon Automatic Data is expected to generate 10.82 times less return on investment than Kanzhun. But when comparing it to its historical volatility, Automatic Data Processing is 2.9 times less risky than Kanzhun. It trades about 0.05 of its potential returns per unit of risk. Kanzhun Ltd ADR is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,370  in Kanzhun Ltd ADR on December 30, 2024 and sell it today you would earn a total of  576.00  from holding Kanzhun Ltd ADR or generate 42.04% 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.  Kanzhun Ltd ADR

Automatic Data Processing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Automatic Data is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Kanzhun Ltd ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kanzhun Ltd ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kanzhun showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automatic Data and Kanzhun

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

The idea behind Automatic Data Processing and Kanzhun Ltd ADR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.