Correlation Between Armada Hflr and Power Line

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

Diversification Opportunities for Armada Hflr and Power Line

-0.21

Correlation Coefficient

Armada Hflr  Power Line

Very good diversification

The 3 months correlation between Armada and Power is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Power Line Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Line Engineering 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 Power Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Line Engineering has no effect on the direction of Armada Hflr i.e., Armada Hflr and Power Line go up and down completely randomly.

Pair Corralation between Armada Hflr and Power Line

Considering the 90-day investment horizon Armada Hflr is expected to generate 64.93 times less return on investment than Power Line. But when comparing it to its historical volatility, Armada Hflr Pr is 28.85 times less risky than Power Line. It trades about 0.02 of its potential returns per unit of risk. Power Line Engineering is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Power Line Engineering on September 14, 2024 and sell it today you would lose (30.00) from holding Power Line Engineering or give up 46.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Armada Hflr Pr  vs.  Power Line Engineering

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.

Power Line Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Line Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Armada Hflr and Power Line

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

The idea behind Armada Hflr Pr and Power Line Engineering 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.