Correlation Between Aptitude Software and Automatic Data

Can any of the company-specific risk be diversified away by investing in both Aptitude Software and Automatic Data 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 Aptitude Software and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aptitude Software Group and Automatic Data Processing, you can compare the effects of market volatilities on Aptitude Software and Automatic Data 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 Aptitude Software with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptitude Software and Automatic Data.

Diversification Opportunities for Aptitude Software and Automatic Data

-0.16

Correlation Coefficient

Aptitude Software  Automatic Data

Good diversification

The 3 months correlation between Aptitude and Automatic is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aptitude Software Group and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and Aptitude Software 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 Aptitude Software Group are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Aptitude Software i.e., Aptitude Software and Automatic Data go up and down completely randomly.

Pair Corralation between Aptitude Software and Automatic Data

Assuming the 90 days trading horizon Aptitude Software Group is expected to under-perform the Automatic Data. But the stock apears to be less risky and, when comparing its historical volatility, Aptitude Software Group is 11.17 times less risky than Automatic Data. The stock trades about -0.12 of its potential returns per unit of risk. The Automatic Data Processing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  29,484  in Automatic Data Processing on December 24, 2024 and sell it today you would earn a total of  471.00  from holding Automatic Data Processing or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Aptitude Software Group  vs.  Automatic Data Processing

Aptitude Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptitude Software Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Automatic Data Processing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Automatic Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptitude Software and Automatic Data

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

The idea behind Aptitude Software Group and Automatic Data Processing 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.