Correlation Between Atos Origin and NL Industries

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

Diversification Opportunities for Atos Origin and NL Industries

0.37

Correlation Coefficient

Atos Origin  NL Industries

Weak diversification

The 3 months correlation between Atos and NL Industries is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Atos Origin SA and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Atos Origin i.e., Atos Origin and NL Industries go up and down completely randomly.

Pair Corralation between Atos Origin and NL Industries

Assuming the 90 days horizon Atos Origin SA is expected to under-perform the NL Industries. In addition to that, Atos Origin is 3.51 times more volatile than NL Industries. It trades about -0.26 of its total potential returns per unit of risk. NL Industries is currently generating about 0.02 per unit of volatility. If you would invest  764.00  in NL Industries on December 30, 2024 and sell it today you would earn a total of  9.00  from holding NL Industries or generate 1.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Atos Origin SA  vs.  NL Industries

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.

NL Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, NL Industries is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Atos Origin and NL Industries

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

The idea behind Atos Origin SA and NL Industries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.