Correlation Between Armada Hflr and Huge

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

Diversification Opportunities for Armada Hflr and Huge

0.01

Correlation Coefficient

Armada Hflr  Huge

Significant diversification

The 3 months correlation between Armada and Huge is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Huge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huge Group 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 Huge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huge Group has no effect on the direction of Armada Hflr i.e., Armada Hflr and Huge go up and down completely randomly.

Pair Corralation between Armada Hflr and Huge

Considering the 90-day investment horizon Armada Hflr is expected to generate 12.98 times less return on investment than Huge. But when comparing it to its historical volatility, Armada Hflr Pr is 5.21 times less risky than Huge. It trades about 0.03 of its potential returns per unit of risk. Huge Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  19,900  in Huge Group on September 15, 2024 and sell it today you would earn a total of  1,100  from holding Huge Group or generate 5.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Armada Hflr Pr  vs.  Huge Group

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.

Huge Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Huge Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Huge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Armada Hflr and Huge

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

The idea behind Armada Hflr Pr and Huge Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.