Correlation Between Armada Hflr and 493267AK4

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and 493267AK4 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 493267AK4 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 KEY 5, you can compare the effects of market volatilities on Armada Hflr and 493267AK4 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 493267AK4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and 493267AK4.

Diversification Opportunities for Armada Hflr and 493267AK4

0.24

Correlation Coefficient

Armada Hflr  493267AK4

Modest diversification

The 3 months correlation between Armada and 493267AK4 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and KEY 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 493267AK4 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 493267AK4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 493267AK4 has no effect on the direction of Armada Hflr i.e., Armada Hflr and 493267AK4 go up and down completely randomly.

Pair Corralation between Armada Hflr and 493267AK4

Considering the 90-day investment horizon Armada Hflr is expected to generate 2.23 times less return on investment than 493267AK4. In addition to that, Armada Hflr is 1.0 times more volatile than KEY 5. It trades about 0.03 of its total potential returns per unit of risk. KEY 5 is currently generating about 0.07 per unit of volatility. If you would invest  6,750  in KEY 5 on September 19, 2024 and sell it today you would earn a total of  2,072  from holding KEY 5 or generate 30.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.31%
Values	Daily Returns

Armada Hflr Pr  vs.  KEY 5

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 weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

493267AK4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY 5 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KEY 5 investors.

Pair Trading with Armada Hflr and 493267AK4

The main advantage of trading using opposite Armada Hflr and 493267AK4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, 493267AK4 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 493267AK4 will offset losses from the drop in 493267AK4's long position.

The idea behind Armada Hflr Pr and KEY 5 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.