Correlation Between ATA Creativity and A1

Can any of the company-specific risk be diversified away by investing in both ATA Creativity and A1 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 ATA Creativity and A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATA Creativity Global and A1 Group, you can compare the effects of market volatilities on ATA Creativity and A1 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 ATA Creativity with a short position of A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATA Creativity and A1.

Diversification Opportunities for ATA Creativity and A1

-0.13

Correlation Coefficient

ATA Creativity  A1

Good diversification

The 3 months correlation between ATA and A1 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ATA Creativity Global and A1 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1 Group and ATA Creativity 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 ATA Creativity Global are associated (or correlated) with A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1 Group has no effect on the direction of ATA Creativity i.e., ATA Creativity and A1 go up and down completely randomly.

Pair Corralation between ATA Creativity and A1

Given the investment horizon of 90 days ATA Creativity is expected to generate 3.89 times less return on investment than A1. But when comparing it to its historical volatility, ATA Creativity Global is 2.84 times less risky than A1. It trades about 0.03 of its potential returns per unit of risk. A1 Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.00  in A1 Group on October 3, 2024 and sell it today you would lose (0.77) from holding A1 Group or give up 77.0% of portfolio value over 90 days.

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

ATA Creativity Global  vs.  A1 Group

ATA Creativity Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATA Creativity Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, ATA Creativity is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

A1 Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A1 Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ATA Creativity and A1

The main advantage of trading using opposite ATA Creativity and A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATA Creativity position performs unexpectedly, A1 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 A1 will offset losses from the drop in A1's long position.

The idea behind ATA Creativity Global and A1 Group 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.