Correlation Between Armada Hflr and Carbon Revolution

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

Diversification Opportunities for Armada Hflr and Carbon Revolution

0.26

Correlation Coefficient

Armada Hflr  Carbon Revolution

Modest diversification

The 3 months correlation between Armada and Carbon is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Carbon Revolution Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Revolution Public 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 Carbon Revolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Revolution Public has no effect on the direction of Armada Hflr i.e., Armada Hflr and Carbon Revolution go up and down completely randomly.

Pair Corralation between Armada Hflr and Carbon Revolution

Considering the 90-day investment horizon Armada Hflr is expected to generate 168.67 times less return on investment than Carbon Revolution. But when comparing it to its historical volatility, Armada Hflr Pr is 16.28 times less risky than Carbon Revolution. It trades about 0.01 of its potential returns per unit of risk. Carbon Revolution Public is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4.89  in Carbon Revolution Public on September 22, 2024 and sell it today you would lose (2.11) from holding Carbon Revolution Public or give up 43.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	46.57%
Values	Daily Returns

Armada Hflr Pr  vs.  Carbon Revolution Public

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.

Carbon Revolution Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Carbon Revolution

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

The idea behind Armada Hflr Pr and Carbon Revolution Public 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.