Correlation Between Armada Hflr and International Stem

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

Diversification Opportunities for Armada Hflr and International Stem

-0.13

Correlation Coefficient

Armada Hflr  International Stem

Good diversification

The 3 months correlation between Armada and International is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and International Stem Cell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stem Cell 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 International Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stem Cell has no effect on the direction of Armada Hflr i.e., Armada Hflr and International Stem go up and down completely randomly.

Pair Corralation between Armada Hflr and International Stem

Considering the 90-day investment horizon Armada Hflr is expected to generate 79.38 times less return on investment than International Stem. But when comparing it to its historical volatility, Armada Hflr Pr is 10.78 times less risky than International Stem. It trades about 0.01 of its potential returns per unit of risk. International Stem Cell is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  18.00  in International Stem Cell on September 30, 2024 and sell it today you would lose (8.00) from holding International Stem Cell or give up 44.44% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  International Stem Cell

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.

International Stem Cell

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Stem Cell are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, International Stem displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and International Stem

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

The idea behind Armada Hflr Pr and International Stem Cell 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.