Correlation Between Batm Advanced and Automatic Data

Can any of the company-specific risk be diversified away by investing in both Batm Advanced and Automatic Data 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 Batm Advanced and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Batm Advanced Communications and Automatic Data Processing, you can compare the effects of market volatilities on Batm Advanced and Automatic Data 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 Batm Advanced with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batm Advanced and Automatic Data.

Diversification Opportunities for Batm Advanced and Automatic Data

-0.72

Correlation Coefficient

Batm Advanced  Automatic Data

Pay attention - limited upside

The 3 months correlation between Batm and Automatic is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Batm Advanced Communications and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and Batm Advanced 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 Batm Advanced Communications are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Batm Advanced i.e., Batm Advanced and Automatic Data go up and down completely randomly.

Pair Corralation between Batm Advanced and Automatic Data

Assuming the 90 days trading horizon Batm Advanced Communications is expected to under-perform the Automatic Data. But the stock apears to be less risky and, when comparing its historical volatility, Batm Advanced Communications is 2.16 times less risky than Automatic Data. The stock trades about -0.01 of its potential returns per unit of risk. The Automatic Data Processing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  24,161  in Automatic Data Processing on September 14, 2024 and sell it today you would earn a total of  5,851  from holding Automatic Data Processing or generate 24.22% return on investment over 90 days.

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

Batm Advanced Communications  vs.  Automatic Data Processing

Batm Advanced Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Batm Advanced is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Automatic Data Processing

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Automatic Data may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Batm Advanced and Automatic Data

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

The idea behind Batm Advanced Communications and Automatic Data Processing 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.