Correlation Between Armada Hflr and FF Australia

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

Diversification Opportunities for Armada Hflr and FF Australia

0.29

Correlation Coefficient

Armada Hflr  FF Australia

Modest diversification

The 3 months correlation between Armada and FPGK is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and FF Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FF Australia 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 FF Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FF Australia has no effect on the direction of Armada Hflr i.e., Armada Hflr and FF Australia go up and down completely randomly.

Pair Corralation between Armada Hflr and FF Australia

Considering the 90-day investment horizon Armada Hflr is expected to generate 1.43 times less return on investment than FF Australia. In addition to that, Armada Hflr is 1.36 times more volatile than FF Australia. It trades about 0.02 of its total potential returns per unit of risk. FF Australia is currently generating about 0.04 per unit of volatility. If you would invest  5,137  in FF Australia on October 1, 2024 and sell it today you would earn a total of  441.00  from holding FF Australia or generate 8.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.78%
Values	Daily Returns

Armada Hflr Pr  vs.  FF Australia

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

FF Australia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FF Australia has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, FF Australia is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Armada Hflr and FF Australia

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

The idea behind Armada Hflr Pr and FF Australia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.