Correlation Between Auto Trader and 4Imprint Group

Can any of the company-specific risk be diversified away by investing in both Auto Trader and 4Imprint Group 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 Auto Trader and 4Imprint Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auto Trader Group and 4Imprint Group Plc, you can compare the effects of market volatilities on Auto Trader and 4Imprint Group 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 Auto Trader with a short position of 4Imprint Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and 4Imprint Group.

Diversification Opportunities for Auto Trader and 4Imprint Group

0.08

Correlation Coefficient

Auto Trader  4Imprint Group

Significant diversification

The 3 months correlation between Auto and 4Imprint is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and 4Imprint Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4Imprint Group Plc and Auto Trader 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 Auto Trader Group are associated (or correlated) with 4Imprint Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4Imprint Group Plc has no effect on the direction of Auto Trader i.e., Auto Trader and 4Imprint Group go up and down completely randomly.

Pair Corralation between Auto Trader and 4Imprint Group

Assuming the 90 days trading horizon Auto Trader is expected to generate 5.61 times less return on investment than 4Imprint Group. But when comparing it to its historical volatility, Auto Trader Group is 1.51 times less risky than 4Imprint Group. It trades about 0.04 of its potential returns per unit of risk. 4Imprint Group Plc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  294,867  in 4Imprint Group Plc on April 20, 2025 and sell it today you would earn a total of  69,633  from holding 4Imprint Group Plc or generate 23.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Auto Trader Group  vs.  4Imprint Group Plc

Auto Trader Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auto Trader Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Auto Trader is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

4Imprint Group Plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 4Imprint Group Plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, 4Imprint Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auto Trader and 4Imprint Group

The main advantage of trading using opposite Auto Trader and 4Imprint Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, 4Imprint Group 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 4Imprint Group will offset losses from the drop in 4Imprint Group's long position.

The idea behind Auto Trader Group and 4Imprint Group Plc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.