Correlation Between Automatic Data and Discount Print

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

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

Diversification Opportunities for Automatic Data and Discount Print

-0.51

Correlation Coefficient

Automatic Data  Discount Print

Excellent diversification

The 3 months correlation between Automatic and Discount is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Discount Print USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discount Print USA and Automatic Data 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 Data Processing are associated (or correlated) with Discount Print. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discount Print USA has no effect on the direction of Automatic Data i.e., Automatic Data and Discount Print go up and down completely randomly.

Pair Corralation between Automatic Data and Discount Print

Considering the 90-day investment horizon Automatic Data Processing is expected to under-perform the Discount Print. But the stock apears to be less risky and, when comparing its historical volatility, Automatic Data Processing is 24.95 times less risky than Discount Print. The stock trades about -0.05 of its potential returns per unit of risk. The Discount Print USA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Discount Print USA on February 3, 2024 and sell it today you would earn a total of  0.02  from holding Discount Print USA or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Automatic Data Processing  vs.  Discount Print USA

Automatic Data Processing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automatic Data Processing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Automatic Data is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Discount Print USA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Discount Print USA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Discount Print demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automatic Data and Discount Print

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

The idea behind Automatic Data Processing and Discount Print USA 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.