Correlation Between Automatic Data and CEOTRONICS

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

Diversification Opportunities for Automatic Data and CEOTRONICS

0.52

Correlation Coefficient

Automatic Data  CEOTRONICS

Very weak diversification

The 3 months correlation between Automatic and CEOTRONICS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS 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 CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of Automatic Data i.e., Automatic Data and CEOTRONICS go up and down completely randomly.

Pair Corralation between Automatic Data and CEOTRONICS

Assuming the 90 days horizon Automatic Data is expected to generate 2.22 times less return on investment than CEOTRONICS. But when comparing it to its historical volatility, Automatic Data Processing is 3.05 times less risky than CEOTRONICS. It trades about 0.23 of its potential returns per unit of risk. CEOTRONICS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  491.00  in CEOTRONICS on September 12, 2024 and sell it today you would earn a total of  169.00  from holding CEOTRONICS or generate 34.42% return on investment over 90 days.

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

Automatic Data Processing  vs.  CEOTRONICS

Automatic Data Processing

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 17 (%) 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.

CEOTRONICS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CEOTRONICS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automatic Data and CEOTRONICS

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

The idea behind Automatic Data Processing and CEOTRONICS 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.