Correlation Between Armada Hflr and KMBB34

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and KMBB34 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 KMBB34 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 KMBB34, you can compare the effects of market volatilities on Armada Hflr and KMBB34 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 KMBB34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and KMBB34.

Diversification Opportunities for Armada Hflr and KMBB34

-0.32

Correlation Coefficient

Armada Hflr  KMBB34

Very good diversification

The 3 months correlation between Armada and KMBB34 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and KMBB34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMBB34 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 KMBB34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMBB34 has no effect on the direction of Armada Hflr i.e., Armada Hflr and KMBB34 go up and down completely randomly.

Pair Corralation between Armada Hflr and KMBB34

Considering the 90-day investment horizon Armada Hflr is expected to generate 13.15 times less return on investment than KMBB34. In addition to that, Armada Hflr is 1.16 times more volatile than KMBB34. It trades about 0.01 of its total potential returns per unit of risk. KMBB34 is currently generating about 0.1 per unit of volatility. If you would invest  67,975  in KMBB34 on September 24, 2024 and sell it today you would earn a total of  14,345  from holding KMBB34 or generate 21.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Armada Hflr Pr  vs.  KMBB34

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 weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

KMBB34

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KMBB34 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KMBB34 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Armada Hflr and KMBB34

The main advantage of trading using opposite Armada Hflr and KMBB34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, KMBB34 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 KMBB34 will offset losses from the drop in KMBB34's long position.

The idea behind Armada Hflr Pr and KMBB34 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.