Correlation Between Automatic Data and Hirequest

Can any of the company-specific risk be diversified away by investing in both Automatic Data and Hirequest 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 Hirequest 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 Hirequest, you can compare the effects of market volatilities on Automatic Data and Hirequest 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 Hirequest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Hirequest.

Diversification Opportunities for Automatic Data and Hirequest

-0.29

Correlation Coefficient

Automatic Data  Hirequest

Very good diversification

The 3 months correlation between Automatic and Hirequest is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Hirequest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hirequest 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 Hirequest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hirequest has no effect on the direction of Automatic Data i.e., Automatic Data and Hirequest go up and down completely randomly.

Pair Corralation between Automatic Data and Hirequest

Considering the 90-day investment horizon Automatic Data Processing is expected to under-perform the Hirequest. But the stock apears to be less risky and, when comparing its historical volatility, Automatic Data Processing is 1.95 times less risky than Hirequest. The stock trades about -0.02 of its potential returns per unit of risk. The Hirequest is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,208  in Hirequest on January 19, 2024 and sell it today you would earn a total of  3.00  from holding Hirequest or generate 0.25% return on investment over 90 days.

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

Automatic Data Processing  vs.  Hirequest

Automatic Data Processing

Risk-Adjusted Performance

4 of 100

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. Even with relatively invariable fundamental indicators, Automatic Data is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Hirequest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hirequest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Automatic Data and Hirequest

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

The idea behind Automatic Data Processing and Hirequest 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.