Correlation Between Automatic Bank and Photomyne

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

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

Diversification Opportunities for Automatic Bank and Photomyne

0.7

Correlation Coefficient

Automatic Bank  Photomyne

Poor diversification

The 3 months correlation between Automatic and Photomyne is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Bank Services and Photomyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photomyne and Automatic Bank 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 Automatic Bank Services are associated (or correlated) with Photomyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photomyne has no effect on the direction of Automatic Bank i.e., Automatic Bank and Photomyne go up and down completely randomly.

Pair Corralation between Automatic Bank and Photomyne

Assuming the 90 days trading horizon Automatic Bank Services is expected to generate 1.82 times more return on investment than Photomyne. However, Automatic Bank is 1.82 times more volatile than Photomyne. It trades about 0.52 of its potential returns per unit of risk. Photomyne is currently generating about 0.35 per unit of risk. If you would invest  142,000  in Automatic Bank Services on September 16, 2024 and sell it today you would earn a total of  112,800  from holding Automatic Bank Services or generate 79.44% return on investment over 90 days.

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

Automatic Bank Services  vs.  Photomyne

Automatic Bank Services

Risk-Adjusted Performance

40 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Bank Services are ranked lower than 40 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Automatic Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Photomyne

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Photomyne are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Photomyne sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automatic Bank and Photomyne

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

The idea behind Automatic Bank Services and Photomyne 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.