Correlation Between Armada Hflr and Victory New

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

By analyzing existing cross correlation between Armada Hflr Pr and Victory New Materials, you can compare the effects of market volatilities on Armada Hflr and Victory New 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 Hflr with a short position of Victory New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Victory New.

Diversification Opportunities for Armada Hflr and Victory New

0.23

Correlation Coefficient

Armada Hflr  Victory New

Modest diversification

The 3 months correlation between Armada and Victory is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials and Armada Hflr 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 Hflr Pr are associated (or correlated) with Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of Armada Hflr i.e., Armada Hflr and Victory New go up and down completely randomly.

Pair Corralation between Armada Hflr and Victory New

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Victory New. In addition to that, Armada Hflr is 1.95 times more volatile than Victory New Materials. It trades about -0.2 of its total potential returns per unit of risk. Victory New Materials is currently generating about -0.14 per unit of volatility. If you would invest  947.00  in Victory New Materials on December 27, 2024 and sell it today you would lose (78.00) from holding Victory New Materials or give up 8.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.67%
Values	Daily Returns

Armada Hflr Pr  vs.  Victory New Materials

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Victory New Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Armada Hflr and Victory New

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

The idea behind Armada Hflr Pr and Victory New Materials 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.