Correlation Between Armada Hflr and Adamjee Insurance

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

Diversification Opportunities for Armada Hflr and Adamjee Insurance

0.47

Correlation Coefficient

Armada Hflr  Adamjee Insurance

Very weak diversification

The 3 months correlation between Armada and Adamjee is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance 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 Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Armada Hflr i.e., Armada Hflr and Adamjee Insurance go up and down completely randomly.

Pair Corralation between Armada Hflr and Adamjee Insurance

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Adamjee Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.12 times less risky than Adamjee Insurance. The stock trades about -0.2 of its potential returns per unit of risk. The Adamjee Insurance is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  4,980  in Adamjee Insurance on December 23, 2024 and sell it today you would lose (280.00) from holding Adamjee Insurance or give up 5.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Armada Hflr Pr  vs.  Adamjee Insurance

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.

Adamjee Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adamjee Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Adamjee Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and Adamjee Insurance

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

The idea behind Armada Hflr Pr and Adamjee Insurance 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.