Correlation Between Automatic Data and Ion Beam

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

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

Diversification Opportunities for Automatic Data and Ion Beam

0.0

Correlation Coefficient

Automatic Data  Ion Beam

Pay attention - limited upside

The 3 months correlation between Automatic and Ion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and Automatic Data 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 Automatic Data Processing are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Automatic Data i.e., Automatic Data and Ion Beam go up and down completely randomly.

Pair Corralation between Automatic Data and Ion Beam

Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.41 times more return on investment than Ion Beam. However, Automatic Data Processing is 2.47 times less risky than Ion Beam. It trades about 0.13 of its potential returns per unit of risk. Ion Beam Applications is currently generating about 0.01 per unit of risk. If you would invest  27,719  in Automatic Data Processing on September 15, 2024 and sell it today you would earn a total of  2,257  from holding Automatic Data Processing or generate 8.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Automatic Data Processing  vs.  Ion Beam Applications

Automatic Data Processing

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Automatic Data may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ion Beam is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Automatic Data and Ion Beam

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

The idea behind Automatic Data Processing and Ion Beam Applications 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.