Correlation Between Armada Hflr and Encres Dubuit

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Encres Dubuit 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 Armada Hflr and Encres Dubuit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and Encres Dubuit SA, you can compare the effects of market volatilities on Armada Hflr and Encres Dubuit 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 Armada Hflr with a short position of Encres Dubuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Encres Dubuit.

Diversification Opportunities for Armada Hflr and Encres Dubuit

-0.33

Correlation Coefficient

Armada Hflr  Encres Dubuit

Very good diversification

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

Pair Corralation between Armada Hflr and Encres Dubuit

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Encres Dubuit. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.72 times less risky than Encres Dubuit. The stock trades about -0.21 of its potential returns per unit of risk. The Encres Dubuit SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Encres Dubuit SA on September 25, 2024 and sell it today you would earn a total of  12.00  from holding Encres Dubuit SA or generate 4.44% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Encres Dubuit SA

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Encres Dubuit SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Encres Dubuit SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Encres Dubuit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Encres Dubuit

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

The idea behind Armada Hflr Pr and Encres Dubuit SA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.