Correlation Between Armada Hflr and Circuit Fabology

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

Diversification Opportunities for Armada Hflr and Circuit Fabology

0.28

Correlation Coefficient

Armada Hflr  Circuit Fabology

Modest diversification

The 3 months correlation between Armada and Circuit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Circuit Fabology Microelectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Circuit Fabology Mic 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 Circuit Fabology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Circuit Fabology Mic has no effect on the direction of Armada Hflr i.e., Armada Hflr and Circuit Fabology go up and down completely randomly.

Pair Corralation between Armada Hflr and Circuit Fabology

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Circuit Fabology. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 2.36 times less risky than Circuit Fabology. The stock trades about -0.01 of its potential returns per unit of risk. The Circuit Fabology Microelectronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,872  in Circuit Fabology Microelectronics on October 2, 2024 and sell it today you would earn a total of  900.00  from holding Circuit Fabology Microelectronics or generate 18.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.2%
Values	Daily Returns

Armada Hflr Pr  vs.  Circuit Fabology Microelectron

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Circuit Fabology Mic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Circuit Fabology Microelectronics 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 basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Armada Hflr and Circuit Fabology

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

The idea behind Armada Hflr Pr and Circuit Fabology Microelectronics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.