Correlation Between Atrium Mortgage and Tsodilo Resources

Can any of the company-specific risk be diversified away by investing in both Atrium Mortgage and Tsodilo Resources 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 Atrium Mortgage and Tsodilo Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atrium Mortgage Investment and Tsodilo Resources Limited, you can compare the effects of market volatilities on Atrium Mortgage and Tsodilo Resources 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 Atrium Mortgage with a short position of Tsodilo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atrium Mortgage and Tsodilo Resources.

Diversification Opportunities for Atrium Mortgage and Tsodilo Resources

-0.36

Correlation Coefficient

Atrium Mortgage  Tsodilo Resources

Very good diversification

The 3 months correlation between Atrium and Tsodilo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Atrium Mortgage Investment and Tsodilo Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsodilo Resources and Atrium Mortgage 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 Atrium Mortgage Investment are associated (or correlated) with Tsodilo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsodilo Resources has no effect on the direction of Atrium Mortgage i.e., Atrium Mortgage and Tsodilo Resources go up and down completely randomly.

Pair Corralation between Atrium Mortgage and Tsodilo Resources

Assuming the 90 days horizon Atrium Mortgage Investment is expected to under-perform the Tsodilo Resources. But the stock apears to be less risky and, when comparing its historical volatility, Atrium Mortgage Investment is 12.51 times less risky than Tsodilo Resources. The stock trades about -0.05 of its potential returns per unit of risk. The Tsodilo Resources Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Tsodilo Resources Limited on September 16, 2024 and sell it today you would earn a total of  3.00  from holding Tsodilo Resources Limited or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Atrium Mortgage Investment  vs.  Tsodilo Resources Limited

Atrium Mortgage Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Atrium Mortgage is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Tsodilo Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tsodilo Resources Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Tsodilo Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atrium Mortgage and Tsodilo Resources

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

The idea behind Atrium Mortgage Investment and Tsodilo Resources Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.