Correlation Between Armada Hflr and Nicholas

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

Diversification Opportunities for Armada Hflr and Nicholas

-0.26

Correlation Coefficient

Armada Hflr  Nicholas

Very good diversification

The 3 months correlation between Armada and Nicholas is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Nicholas Ltd Edition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Edition 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 Nicholas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Edition has no effect on the direction of Armada Hflr i.e., Armada Hflr and Nicholas go up and down completely randomly.

Pair Corralation between Armada Hflr and Nicholas

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Nicholas. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.09 times less risky than Nicholas. The stock trades about -0.09 of its potential returns per unit of risk. The Nicholas Ltd Edition is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,146  in Nicholas Ltd Edition on September 17, 2024 and sell it today you would earn a total of  72.00  from holding Nicholas Ltd Edition or generate 2.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Armada Hflr Pr  vs.  Nicholas Ltd Edition

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.

Nicholas Edition

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nicholas Ltd Edition are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Nicholas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and Nicholas

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

The idea behind Armada Hflr Pr and Nicholas Ltd Edition 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.