Correlation Between Armada Hflr and Crown Holdings

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

Diversification Opportunities for Armada Hflr and Crown Holdings

0.6

Correlation Coefficient

Armada Hflr  Crown Holdings

Poor diversification

The 3 months correlation between Armada and Crown is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings 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 Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Armada Hflr i.e., Armada Hflr and Crown Holdings go up and down completely randomly.

Pair Corralation between Armada Hflr and Crown Holdings

Considering the 90-day investment horizon Armada Hflr is expected to generate 6.52 times less return on investment than Crown Holdings. But when comparing it to its historical volatility, Armada Hflr Pr is 1.12 times less risky than Crown Holdings. It trades about 0.0 of its potential returns per unit of risk. Crown Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,753  in Crown Holdings on October 10, 2024 and sell it today you would lose (91.00) from holding Crown Holdings or give up 1.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.0%
Values	Daily Returns

Armada Hflr Pr  vs.  Crown Holdings

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.

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Armada Hflr and Crown Holdings

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

The idea behind Armada Hflr Pr and Crown Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.