Correlation Between Atlantic Energy and Proof Acquisition

Can any of the company-specific risk be diversified away by investing in both Atlantic Energy and Proof Acquisition 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 Proof Acquisition 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 Proof Acquisition I, you can compare the effects of market volatilities on Atlantic Energy and Proof Acquisition 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 Proof Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantic Energy and Proof Acquisition.

Diversification Opportunities for Atlantic Energy and Proof Acquisition

0.34

Correlation Coefficient

Atlantic Energy  Proof Acquisition

Weak diversification

The 3 months correlation between Atlantic and Proof is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Energy Solutions and Proof Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proof Acquisition 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 Proof Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proof Acquisition has no effect on the direction of Atlantic Energy i.e., Atlantic Energy and Proof Acquisition go up and down completely randomly.

Pair Corralation between Atlantic Energy and Proof Acquisition

If you would invest  1.60  in Atlantic Energy Solutions on September 3, 2024 and sell it today you would lose (0.02) from holding Atlantic Energy Solutions or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

Atlantic Energy Solutions  vs.  Proof Acquisition I

Atlantic Energy Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Energy Solutions are ranked lower than 7 (%) 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.

Proof Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proof Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Proof Acquisition is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Atlantic Energy and Proof Acquisition

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

The idea behind Atlantic Energy Solutions and Proof Acquisition I 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.