Correlation Between Armada Hflr and Acr International

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

Diversification Opportunities for Armada Hflr and Acr International

0.5

Correlation Coefficient

Armada Hflr  Acr International

Very weak diversification

The 3 months correlation between Armada and Acr is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Acr International Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acr International Quality 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 Acr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acr International Quality has no effect on the direction of Armada Hflr i.e., Armada Hflr and Acr International go up and down completely randomly.

Pair Corralation between Armada Hflr and Acr International

Considering the 90-day investment horizon Armada Hflr is expected to generate 1.63 times less return on investment than Acr International. In addition to that, Armada Hflr is 1.63 times more volatile than Acr International Quality. It trades about 0.01 of its total potential returns per unit of risk. Acr International Quality is currently generating about 0.03 per unit of volatility. If you would invest  1,006  in Acr International Quality on September 29, 2024 and sell it today you would earn a total of  108.00  from holding Acr International Quality or generate 10.74% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Acr International Quality

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 fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Acr International Quality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acr International Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Armada Hflr and Acr International

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

The idea behind Armada Hflr Pr and Acr International Quality 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.