Correlation Between Armada Hflr and ECS ICT

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

Diversification Opportunities for Armada Hflr and ECS ICT

-0.36

Correlation Coefficient

Armada Hflr  ECS ICT

Very good diversification

The 3 months correlation between Armada and ECS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and ECS ICT Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECS ICT Bhd 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 ECS ICT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECS ICT Bhd has no effect on the direction of Armada Hflr i.e., Armada Hflr and ECS ICT go up and down completely randomly.

Pair Corralation between Armada Hflr and ECS ICT

Considering the 90-day investment horizon Armada Hflr is expected to generate 19.17 times less return on investment than ECS ICT. But when comparing it to its historical volatility, Armada Hflr Pr is 1.62 times less risky than ECS ICT. It trades about 0.01 of its potential returns per unit of risk. ECS ICT Bhd is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  112.00  in ECS ICT Bhd on September 26, 2024 and sell it today you would earn a total of  285.00  from holding ECS ICT Bhd or generate 254.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.58%
Values	Daily Returns

Armada Hflr Pr  vs.  ECS ICT Bhd

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 fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

ECS ICT Bhd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ECS ICT Bhd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, ECS ICT disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and ECS ICT

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

The idea behind Armada Hflr Pr and ECS ICT Bhd 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.