Correlation Between Jfrog and Automatic Data

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

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

Diversification Opportunities for Jfrog and Automatic Data

0.82

Correlation Coefficient

Jfrog  Automatic Data

Very poor diversification

The 3 months correlation between Jfrog and Automatic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Jfrog 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 Jfrog 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 Jfrog 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 Jfrog i.e., Jfrog and Automatic Data go up and down completely randomly.

Pair Corralation between Jfrog and Automatic Data

Given the investment horizon of 90 days Jfrog is expected to generate 2.3 times more return on investment than Automatic Data. However, Jfrog is 2.3 times more volatile than Automatic Data Processing. It trades about 0.07 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.08 per unit of risk. If you would invest  2,953  in Jfrog on December 29, 2024 and sell it today you would earn a total of  283.00  from holding Jfrog or generate 9.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Jfrog  vs.  Automatic Data Processing

Jfrog

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jfrog are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Jfrog may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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. Even with relatively invariable fundamental indicators, Automatic Data is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Jfrog and Automatic Data

The main advantage of trading using opposite Jfrog and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jfrog 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 Jfrog 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.