Correlation Between Armada Hflr and Double Bond

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Double Bond 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 Double Bond 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 Double Bond Chemical, you can compare the effects of market volatilities on Armada Hflr and Double Bond 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 Double Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Double Bond.

Diversification Opportunities for Armada Hflr and Double Bond

0.06

Correlation Coefficient

Armada Hflr  Double Bond

Significant diversification

The 3 months correlation between Armada and Double is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Double Bond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Bond Chemical 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 Double Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Bond Chemical has no effect on the direction of Armada Hflr i.e., Armada Hflr and Double Bond go up and down completely randomly.

Pair Corralation between Armada Hflr and Double Bond

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Double Bond. In addition to that, Armada Hflr is 1.18 times more volatile than Double Bond Chemical. It trades about -0.15 of its total potential returns per unit of risk. Double Bond Chemical is currently generating about -0.03 per unit of volatility. If you would invest  4,450  in Double Bond Chemical on September 24, 2024 and sell it today you would lose (120.00) from holding Double Bond Chemical or give up 2.7% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  Double Bond Chemical

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Double Bond Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Double Bond Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Double Bond is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Armada Hflr and Double Bond

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

The idea behind Armada Hflr Pr and Double Bond Chemical 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.