Correlation Between Automatic Data and Mastech Holdings
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Mastech Holdings 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 Mastech Holdings 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 Mastech Holdings, you can compare the effects of market volatilities on Automatic Data and Mastech Holdings 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 Mastech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Mastech Holdings.
Diversification Opportunities for Automatic Data and Mastech Holdings
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Automatic and Mastech is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Mastech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastech Holdings 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 Mastech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastech Holdings has no effect on the direction of Automatic Data i.e., Automatic Data and Mastech Holdings go up and down completely randomly.
Pair Corralation between Automatic Data and Mastech Holdings
Considering the 90-day investment horizon Automatic Data Processing is expected to generate 0.68 times more return on investment than Mastech Holdings. However, Automatic Data Processing is 1.48 times less risky than Mastech Holdings. It trades about 0.04 of its potential returns per unit of risk. Mastech Holdings is currently generating about -0.04 per unit of risk. If you would invest 24,507 in Automatic Data Processing on January 26, 2024 and sell it today you would earn a total of 154.00 from holding Automatic Data Processing or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Mastech Holdings
Performance |
| Timeline |
| Automatic Data Processing |
| Mastech Holdings |
Automatic Data and Mastech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Mastech Holdings
The main advantage of trading using opposite Automatic Data and Mastech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Mastech Holdings 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 Mastech Holdings will offset losses from the drop in Mastech Holdings' long position.| Automatic Data vs. ExlService Holdings | Automatic Data vs. WNS Holdings | Automatic Data vs. Gartner | Automatic Data vs. The Hackett Group |
| Mastech Holdings vs. ExlService Holdings | Mastech Holdings vs. WNS Holdings | Mastech Holdings vs. Gartner | Mastech Holdings vs. The Hackett Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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