Correlation Between American Tower and DATAGROUP

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

By analyzing existing cross correlation between American Tower Corp and DATAGROUP SE, you can compare the effects of market volatilities on American Tower and DATAGROUP 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 American Tower with a short position of DATAGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Tower and DATAGROUP.

Diversification Opportunities for American Tower and DATAGROUP

-0.42

Correlation Coefficient

American Tower  DATAGROUP

Very good diversification

The 3 months correlation between American and DATAGROUP is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Tower Corp and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE and American Tower 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 American Tower Corp are associated (or correlated) with DATAGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATAGROUP SE has no effect on the direction of American Tower i.e., American Tower and DATAGROUP go up and down completely randomly.

Pair Corralation between American Tower and DATAGROUP

Assuming the 90 days horizon American Tower Corp is expected to generate 0.63 times more return on investment than DATAGROUP. However, American Tower Corp is 1.59 times less risky than DATAGROUP. It trades about 0.15 of its potential returns per unit of risk. DATAGROUP SE is currently generating about -0.03 per unit of risk. If you would invest  17,482  in American Tower Corp on December 25, 2024 and sell it today you would earn a total of  2,528  from holding American Tower Corp or generate 14.46% return on investment over 90 days.

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

American Tower Corp  vs.  DATAGROUP SE

American Tower Corp

Risk-Adjusted Performance

Good

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

DATAGROUP SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days DATAGROUP SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, DATAGROUP is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Tower and DATAGROUP

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

The idea behind American Tower Corp and DATAGROUP SE 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.