Correlation Between Armada Hflr and Centrotec

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

Diversification Opportunities for Armada Hflr and Centrotec

-0.18

Correlation Coefficient

Armada Hflr  Centrotec

Good diversification

The 3 months correlation between Armada and Centrotec is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Centrotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrotec SE 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 Centrotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrotec SE has no effect on the direction of Armada Hflr i.e., Armada Hflr and Centrotec go up and down completely randomly.

Pair Corralation between Armada Hflr and Centrotec

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Centrotec. In addition to that, Armada Hflr is 1.24 times more volatile than Centrotec SE. It trades about -0.08 of its total potential returns per unit of risk. Centrotec SE is currently generating about 0.08 per unit of volatility. If you would invest  4,960  in Centrotec SE on September 17, 2024 and sell it today you would earn a total of  290.00  from holding Centrotec SE or generate 5.85% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Centrotec SE

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 latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Centrotec SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centrotec SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Centrotec is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and Centrotec

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

The idea behind Armada Hflr Pr and Centrotec SE 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..