Correlation Between Atmos Energy and LION ONE

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

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

Diversification Opportunities for Atmos Energy and LION ONE

-0.36

Correlation Coefficient

Atmos Energy  LION ONE

Very good diversification

The 3 months correlation between Atmos and LION is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS and Atmos Energy 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 Atmos Energy are associated (or correlated) with LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Atmos Energy i.e., Atmos Energy and LION ONE go up and down completely randomly.

Pair Corralation between Atmos Energy and LION ONE

Assuming the 90 days horizon Atmos Energy is expected to generate 3.74 times less return on investment than LION ONE. But when comparing it to its historical volatility, Atmos Energy is 6.95 times less risky than LION ONE. It trades about 0.33 of its potential returns per unit of risk. LION ONE METALS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  16.00  in LION ONE METALS on October 20, 2024 and sell it today you would earn a total of  4.00  from holding LION ONE METALS or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Atmos Energy  vs.  LION ONE METALS

Atmos Energy

Risk-Adjusted Performance

8 of 100

OK

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

LION ONE METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LION ONE METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LION ONE 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 Atmos Energy and LION ONE

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

The idea behind Atmos Energy and LION ONE METALS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.