Correlation Between Atlas Engineered and Sparx Technology

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

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

Diversification Opportunities for Atlas Engineered and Sparx Technology

-0.15

Correlation Coefficient

Atlas Engineered  Sparx Technology

Good diversification

The 3 months correlation between Atlas and Sparx is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Engineered Products and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and Atlas Engineered 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 Atlas Engineered Products are associated (or correlated) with Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Atlas Engineered i.e., Atlas Engineered and Sparx Technology go up and down completely randomly.

Pair Corralation between Atlas Engineered and Sparx Technology

Assuming the 90 days horizon Atlas Engineered is expected to generate 10.57 times less return on investment than Sparx Technology. In addition to that, Atlas Engineered is 1.27 times more volatile than Sparx Technology. It trades about 0.01 of its total potential returns per unit of risk. Sparx Technology is currently generating about 0.18 per unit of volatility. If you would invest  2,351  in Sparx Technology on October 8, 2024 and sell it today you would earn a total of  565.00  from holding Sparx Technology or generate 24.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Atlas Engineered Products  vs.  Sparx Technology

Atlas Engineered Products

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Engineered Products are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Atlas Engineered is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sparx Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Engineered and Sparx Technology

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

The idea behind Atlas Engineered Products and Sparx Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.