Correlation Between Atos Origin and Direct Communication

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

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

Diversification Opportunities for Atos Origin and Direct Communication

0.62

Correlation Coefficient

Atos Origin  Direct Communication

Poor diversification

The 3 months correlation between Atos and Direct is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Atos Origin SA and Direct Communication Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Communication and Atos Origin 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 Atos Origin SA are associated (or correlated) with Direct Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Communication has no effect on the direction of Atos Origin i.e., Atos Origin and Direct Communication go up and down completely randomly.

Pair Corralation between Atos Origin and Direct Communication

Assuming the 90 days horizon Atos Origin SA is expected to under-perform the Direct Communication. In addition to that, Atos Origin is 1.53 times more volatile than Direct Communication Solutions. It trades about -0.26 of its total potential returns per unit of risk. Direct Communication Solutions is currently generating about -0.18 per unit of volatility. If you would invest  569.00  in Direct Communication Solutions on December 28, 2024 and sell it today you would lose (372.00) from holding Direct Communication Solutions or give up 65.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Atos Origin SA  vs.  Direct Communication Solutions

Atos Origin SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atos Origin SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Direct Communication

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direct Communication Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Atos Origin and Direct Communication

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

The idea behind Atos Origin SA and Direct Communication Solutions 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..