Correlation Between METAIR INVTS and Automatic Data

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

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

Diversification Opportunities for METAIR INVTS and Automatic Data

-0.86

Correlation Coefficient

METAIR INVTS  Automatic Data

Pay attention - limited upside

The 3 months correlation between METAIR and Automatic is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding METAIR INVTS LTD 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 METAIR INVTS 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 METAIR INVTS LTD 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 METAIR INVTS i.e., METAIR INVTS and Automatic Data go up and down completely randomly.

Pair Corralation between METAIR INVTS and Automatic Data

Assuming the 90 days trading horizon METAIR INVTS LTD is expected to under-perform the Automatic Data. In addition to that, METAIR INVTS is 2.71 times more volatile than Automatic Data Processing. It trades about -0.16 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.19 per unit of volatility. If you would invest  24,780  in Automatic Data Processing on September 21, 2024 and sell it today you would earn a total of  3,550  from holding Automatic Data Processing or generate 14.33% return on investment over 90 days.

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

METAIR INVTS LTD  vs.  Automatic Data Processing

METAIR INVTS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METAIR INVTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Automatic Data Processing

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Automatic Data reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with METAIR INVTS and Automatic Data

The main advantage of trading using opposite METAIR INVTS and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METAIR INVTS 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 METAIR INVTS LTD 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.