Correlation Between Armada Hflr and NR 21

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and NR 21 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 NR 21 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 NR 21 SA, you can compare the effects of market volatilities on Armada Hflr and NR 21 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 NR 21. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and NR 21.

Diversification Opportunities for Armada Hflr and NR 21

0.22

Correlation Coefficient

Armada Hflr  NR 21

Modest diversification

The 3 months correlation between Armada and NR21 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and NR 21 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NR 21 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 NR 21. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NR 21 SA has no effect on the direction of Armada Hflr i.e., Armada Hflr and NR 21 go up and down completely randomly.

Pair Corralation between Armada Hflr and NR 21

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.47 times more return on investment than NR 21. However, Armada Hflr Pr is 2.15 times less risky than NR 21. It trades about 0.02 of its potential returns per unit of risk. NR 21 SA is currently generating about -0.06 per unit of risk. If you would invest  957.00  in Armada Hflr Pr on September 26, 2024 and sell it today you would earn a total of  66.00  from holding Armada Hflr Pr or generate 6.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.42%
Values	Daily Returns

Armada Hflr Pr  vs.  NR 21 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 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.

NR 21 SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NR 21 SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NR 21 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 NR 21

The main advantage of trading using opposite Armada Hflr and NR 21 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, NR 21 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 NR 21 will offset losses from the drop in NR 21's long position.

The idea behind Armada Hflr Pr and NR 21 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.