Correlation Between Atco and AuraSource

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

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

Diversification Opportunities for Atco and AuraSource

0.0

Correlation Coefficient

Atco  AuraSource

Pay attention - limited upside

The 3 months correlation between Atco and AuraSource is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Atco and AuraSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AuraSource and Atco 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 Atco are associated (or correlated) with AuraSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AuraSource has no effect on the direction of Atco i.e., Atco and AuraSource go up and down completely randomly.

Pair Corralation between Atco and AuraSource

If you would invest  3,245  in Atco on December 30, 2024 and sell it today you would earn a total of  252.00  from holding Atco or generate 7.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Atco  vs.  AuraSource

Atco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atco are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, Atco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AuraSource

Risk-Adjusted Performance

Very Weak

Over the last 90 days AuraSource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AuraSource is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Atco and AuraSource

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

The idea behind Atco and AuraSource 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.