Correlation Between Armada Hflr and MDA

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

Diversification Opportunities for Armada Hflr and MDA

-0.5

Correlation Coefficient

Armada Hflr  MDA

Very good diversification

The 3 months correlation between Armada and MDA is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and MDA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDA 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 MDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDA has no effect on the direction of Armada Hflr i.e., Armada Hflr and MDA go up and down completely randomly.

Pair Corralation between Armada Hflr and MDA

Considering the 90-day investment horizon Armada Hflr is expected to generate 19.12 times less return on investment than MDA. But when comparing it to its historical volatility, Armada Hflr Pr is 3.14 times less risky than MDA. It trades about 0.03 of its potential returns per unit of risk. MDA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,585  in MDA on September 15, 2024 and sell it today you would earn a total of  265.00  from holding MDA or generate 10.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Armada Hflr Pr  vs.  MDA

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.

MDA

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MDA are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, MDA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and MDA

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

The idea behind Armada Hflr Pr and MDA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.