Correlation Between Tatton Asset and Automatic Data

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

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

Diversification Opportunities for Tatton Asset and Automatic Data

-0.1

Correlation Coefficient

Tatton Asset  Automatic Data

Good diversification

The 3 months correlation between Tatton and Automatic is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tatton Asset Management 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 Tatton Asset 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 Tatton Asset Management 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 Tatton Asset i.e., Tatton Asset and Automatic Data go up and down completely randomly.

Pair Corralation between Tatton Asset and Automatic Data

Assuming the 90 days trading horizon Tatton Asset Management is expected to generate 1.74 times more return on investment than Automatic Data. However, Tatton Asset is 1.74 times more volatile than Automatic Data Processing. It trades about 0.17 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.06 per unit of risk. If you would invest  58,175  in Tatton Asset Management on April 23, 2025 and sell it today you would earn a total of  11,825  from holding Tatton Asset Management or generate 20.33% return on investment over 90 days.

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

Tatton Asset Management  vs.  Automatic Data Processing

Tatton Asset Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tatton Asset Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tatton Asset exhibited solid returns over the last few months and may actually be approaching a breakup point.

Automatic Data Processing

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Automatic Data is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tatton Asset and Automatic Data

The main advantage of trading using opposite Tatton Asset and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tatton Asset 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 Tatton Asset Management 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.