Correlation Between Safe Bulkers and Automatic Data

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

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

Diversification Opportunities for Safe Bulkers and Automatic Data

0.44

Correlation Coefficient

Safe Bulkers  Automatic Data

Very weak diversification

The 3 months correlation between Safe and Automatic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers 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 Safe Bulkers 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 Safe Bulkers 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 Safe Bulkers i.e., Safe Bulkers and Automatic Data go up and down completely randomly.

Pair Corralation between Safe Bulkers and Automatic Data

Allowing for the 90-day total investment horizon Safe Bulkers is expected to generate 2.03 times more return on investment than Automatic Data. However, Safe Bulkers is 2.03 times more volatile than Automatic Data Processing. It trades about 0.08 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  343.00  in Safe Bulkers on December 28, 2024 and sell it today you would earn a total of  33.00  from holding Safe Bulkers or generate 9.62% return on investment over 90 days.

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

Safe Bulkers  vs.  Automatic Data Processing

Safe Bulkers

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Safe Bulkers 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 Safe Bulkers and Automatic Data

The main advantage of trading using opposite Safe Bulkers and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe Bulkers 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 Safe Bulkers 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.