Correlation Between ATON and THiRA-UTECH

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

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

Diversification Opportunities for ATON and THiRA-UTECH

0.46

Correlation Coefficient

ATON  THiRA-UTECH

Very weak diversification

The 3 months correlation between ATON and THiRA-UTECH is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ATON Inc and THiRA UTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THiRA UTECH LTD and ATON 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 ATON Inc are associated (or correlated) with THiRA-UTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THiRA UTECH LTD has no effect on the direction of ATON i.e., ATON and THiRA-UTECH go up and down completely randomly.

Pair Corralation between ATON and THiRA-UTECH

Assuming the 90 days trading horizon ATON Inc is expected to under-perform the THiRA-UTECH. But the stock apears to be less risky and, when comparing its historical volatility, ATON Inc is 1.02 times less risky than THiRA-UTECH. The stock trades about -0.09 of its potential returns per unit of risk. The THiRA UTECH LTD is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  539,000  in THiRA UTECH LTD on December 4, 2024 and sell it today you would lose (7,000) from holding THiRA UTECH LTD or give up 1.3% of portfolio value over 90 days.

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

ATON Inc  vs.  THiRA UTECH LTD

ATON Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATON Inc are ranked lower than 3 (%) 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.

THiRA UTECH LTD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in THiRA UTECH LTD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, THiRA-UTECH may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ATON and THiRA-UTECH

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

The idea behind ATON Inc and THiRA UTECH LTD 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.