Correlation Between Kg Chemical and ATON

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

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

Diversification Opportunities for Kg Chemical and ATON

0.08

Correlation Coefficient

Kg Chemical  ATON

Significant diversification

The 3 months correlation between 001390 and ATON is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kg Chemical and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc and Kg Chemical 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 Kg Chemical are associated (or correlated) with ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of Kg Chemical i.e., Kg Chemical and ATON go up and down completely randomly.

Pair Corralation between Kg Chemical and ATON

Assuming the 90 days trading horizon Kg Chemical is expected to generate 16.05 times less return on investment than ATON. But when comparing it to its historical volatility, Kg Chemical is 3.07 times less risky than ATON. It trades about 0.03 of its potential returns per unit of risk. ATON Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  405,791  in ATON Inc on October 24, 2024 and sell it today you would earn a total of  256,209  from holding ATON Inc or generate 63.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Kg Chemical  vs.  ATON Inc

Kg Chemical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kg Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kg Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ATON Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATON Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ATON sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kg Chemical and ATON

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

The idea behind Kg Chemical and ATON Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..