Correlation Between Automatic Data and FUYO GENERAL

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

Diversification Opportunities for Automatic Data and FUYO GENERAL

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Automatic and FUYO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE 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 FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of Automatic Data i.e., Automatic Data and FUYO GENERAL go up and down completely randomly.

Pair Corralation between Automatic Data and FUYO GENERAL

Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.9 times more return on investment than FUYO GENERAL. However, Automatic Data Processing is 1.12 times less risky than FUYO GENERAL. It trades about 0.2 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about 0.06 per unit of risk. If you would invest  24,855  in Automatic Data Processing on October 1, 2024 and sell it today you would earn a total of  3,485  from holding Automatic Data Processing or generate 14.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Automatic Data Processing  vs.  FUYO GENERAL LEASE

 Performance 
       Timeline  
Automatic Data Processing 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
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.
FUYO GENERAL LEASE 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in FUYO GENERAL LEASE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FUYO GENERAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Automatic Data and FUYO GENERAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Automatic Data and FUYO GENERAL

The main advantage of trading using opposite Automatic Data and FUYO GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, FUYO GENERAL 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 FUYO GENERAL will offset losses from the drop in FUYO GENERAL's long position.
The idea behind Automatic Data Processing and FUYO GENERAL LEASE 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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