Correlation Between Automatic Data and REDSUN PROPERTIES

Can any of the company-specific risk be diversified away by investing in both Automatic Data and REDSUN PROPERTIES 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 REDSUN PROPERTIES 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 REDSUN PROPERTIES GROUP, you can compare the effects of market volatilities on Automatic Data and REDSUN PROPERTIES 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 REDSUN PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and REDSUN PROPERTIES.

Diversification Opportunities for Automatic Data and REDSUN PROPERTIES

-0.53

Correlation Coefficient

Automatic Data  REDSUN PROPERTIES

Excellent diversification

The 3 months correlation between Automatic and REDSUN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES 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 REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of Automatic Data i.e., Automatic Data and REDSUN PROPERTIES go up and down completely randomly.

Pair Corralation between Automatic Data and REDSUN PROPERTIES

Assuming the 90 days horizon Automatic Data Processing is expected to under-perform the REDSUN PROPERTIES. But the stock apears to be less risky and, when comparing its historical volatility, Automatic Data Processing is 14.13 times less risky than REDSUN PROPERTIES. The stock trades about -0.09 of its potential returns per unit of risk. The REDSUN PROPERTIES GROUP is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.20  in REDSUN PROPERTIES GROUP on September 25, 2024 and sell it today you would earn a total of  0.10  from holding REDSUN PROPERTIES GROUP or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Automatic Data Processing  vs.  REDSUN PROPERTIES GROUP

Automatic Data Processing

Risk-Adjusted Performance

15 of 100

Good

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.

REDSUN PROPERTIES

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REDSUN PROPERTIES GROUP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REDSUN PROPERTIES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automatic Data and REDSUN PROPERTIES

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

The idea behind Automatic Data Processing and REDSUN PROPERTIES GROUP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.