Correlation Between Atlantic Energy and IFAN Financial

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

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

Diversification Opportunities for Atlantic Energy and IFAN Financial

-0.48

Correlation Coefficient

Atlantic Energy  IFAN Financial

Very good diversification

The 3 months correlation between Atlantic and IFAN is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Energy Solutions and IFAN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IFAN Financial and Atlantic 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 Atlantic Energy Solutions are associated (or correlated) with IFAN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IFAN Financial has no effect on the direction of Atlantic Energy i.e., Atlantic Energy and IFAN Financial go up and down completely randomly.

Pair Corralation between Atlantic Energy and IFAN Financial

Given the investment horizon of 90 days Atlantic Energy Solutions is expected to generate 0.67 times more return on investment than IFAN Financial. However, Atlantic Energy Solutions is 1.49 times less risky than IFAN Financial. It trades about 0.1 of its potential returns per unit of risk. IFAN Financial is currently generating about 0.04 per unit of risk. If you would invest  0.85  in Atlantic Energy Solutions on December 20, 2024 and sell it today you would earn a total of  0.25  from holding Atlantic Energy Solutions or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Atlantic Energy Solutions  vs.  IFAN Financial

Atlantic Energy Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Energy Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Atlantic Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

IFAN Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IFAN Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, IFAN Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlantic Energy and IFAN Financial

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

The idea behind Atlantic Energy Solutions and IFAN Financial 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.