Correlation Between Tokyu Construction and Automatic Data

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

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

Diversification Opportunities for Tokyu Construction and Automatic Data

-0.77

Correlation Coefficient

Tokyu Construction  Automatic Data

Pay attention - limited upside

The 3 months correlation between Tokyu and Automatic is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu Construction Co 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 Tokyu Construction 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 Tokyu Construction Co 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 Tokyu Construction i.e., Tokyu Construction and Automatic Data go up and down completely randomly.

Pair Corralation between Tokyu Construction and Automatic Data

Assuming the 90 days horizon Tokyu Construction Co is expected to generate 1.18 times more return on investment than Automatic Data. However, Tokyu Construction is 1.18 times more volatile than Automatic Data Processing. It trades about 0.24 of its potential returns per unit of risk. Automatic Data Processing is currently generating about -0.08 per unit of risk. If you would invest  515.00  in Tokyu Construction Co on May 15, 2025 and sell it today you would earn a total of  125.00  from holding Tokyu Construction Co or generate 24.27% return on investment over 90 days.

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

Tokyu Construction Co  vs.  Automatic Data Processing

Tokyu Construction

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tokyu Construction Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tokyu Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Automatic Data Processing

Risk-Adjusted Performance

Weakest

Over the last 90 days Automatic Data Processing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Tokyu Construction and Automatic Data

The main advantage of trading using opposite Tokyu Construction and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyu Construction 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 Tokyu Construction Co 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.