Correlation Between Armada Hflr and S1NP34

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and S1NP34 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 Armada Hflr and S1NP34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and S1NP34, you can compare the effects of market volatilities on Armada Hflr and S1NP34 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 Armada Hflr with a short position of S1NP34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and S1NP34.

Diversification Opportunities for Armada Hflr and S1NP34

-0.2

Correlation Coefficient

Armada Hflr  S1NP34

Good diversification

The 3 months correlation between Armada and S1NP34 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and S1NP34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S1NP34 and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with S1NP34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S1NP34 has no effect on the direction of Armada Hflr i.e., Armada Hflr and S1NP34 go up and down completely randomly.

Pair Corralation between Armada Hflr and S1NP34

Considering the 90-day investment horizon Armada Hflr is expected to generate 9.79 times less return on investment than S1NP34. But when comparing it to its historical volatility, Armada Hflr Pr is 1.28 times less risky than S1NP34. It trades about 0.01 of its potential returns per unit of risk. S1NP34 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  43,620  in S1NP34 on September 23, 2024 and sell it today you would earn a total of  31,771  from holding S1NP34 or generate 72.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Armada Hflr Pr  vs.  S1NP34

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

S1NP34

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in S1NP34 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, S1NP34 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Armada Hflr and S1NP34

The main advantage of trading using opposite Armada Hflr and S1NP34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, S1NP34 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 S1NP34 will offset losses from the drop in S1NP34's long position.

The idea behind Armada Hflr Pr and S1NP34 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.