Correlation Between CGN Resources and Automatic Data
Can any of the company-specific risk be diversified away by investing in both CGN Resources 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 CGN Resources and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGN Resources and Automatic Data Processing, you can compare the effects of market volatilities on CGN Resources 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 CGN Resources with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGN Resources and Automatic Data.
Diversification Opportunities for CGN Resources and Automatic Data
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between CGN and Automatic is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CGN Resources 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 CGN Resources 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 CGN Resources 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 CGN Resources i.e., CGN Resources and Automatic Data go up and down completely randomly.
Pair Corralation between CGN Resources and Automatic Data
Assuming the 90 days trading horizon CGN Resources is expected to generate 8.41 times more return on investment than Automatic Data. However, CGN Resources is 8.41 times more volatile than Automatic Data Processing. It trades about 0.05 of its potential returns per unit of risk. Automatic Data Processing is currently generating about -0.2 per unit of risk. If you would invest 5.70 in CGN Resources on August 31, 2025 and sell it today you would earn a total of 0.40 from holding CGN Resources or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.92% |
| Values | Daily Returns |
CGN Resources vs. Automatic Data Processing
Performance |
| Timeline |
| CGN Resources |
| Automatic Data Processing |
CGN Resources and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGN Resources and Automatic Data
The main advantage of trading using opposite CGN Resources and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGN Resources 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.| CGN Resources vs. Olympio Metals | CGN Resources vs. Technology One | CGN Resources vs. Beam Communications Holdings | CGN Resources vs. Computershare |
| Automatic Data vs. Brookfield Office Properties | Automatic Data vs. Retail Food Group | Automatic Data vs. Infrastrutture Wireless Italiane | Automatic Data vs. Piedmont Office Realty |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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