Correlation Between TIANDE CHEMICAL and Automatic Data

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

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

Diversification Opportunities for TIANDE CHEMICAL and Automatic Data

0.0

Correlation Coefficient

TIANDE CHEMICAL  Automatic Data

Pay attention - limited upside

The 3 months correlation between TIANDE and Automatic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL 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 TIANDE CHEMICAL 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 TIANDE CHEMICAL 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 TIANDE CHEMICAL i.e., TIANDE CHEMICAL and Automatic Data go up and down completely randomly.

Pair Corralation between TIANDE CHEMICAL and Automatic Data

If you would invest  7.25  in TIANDE CHEMICAL on December 22, 2024 and sell it today you would earn a total of  0.00  from holding TIANDE CHEMICAL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

TIANDE CHEMICAL  vs.  Automatic Data Processing

TIANDE CHEMICAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TIANDE CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TIANDE CHEMICAL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Automatic Data Processing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Automatic Data Processing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Automatic Data is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TIANDE CHEMICAL and Automatic Data

The main advantage of trading using opposite TIANDE CHEMICAL and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIANDE CHEMICAL 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 TIANDE CHEMICAL 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.