Correlation Between ATMA Participaes and Western Union

Can any of the company-specific risk be diversified away by investing in both ATMA Participaes and Western Union 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 ATMA Participaes and Western Union into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATMA Participaes SA and The Western Union, you can compare the effects of market volatilities on ATMA Participaes and Western Union 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 ATMA Participaes with a short position of Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATMA Participaes and Western Union.

Diversification Opportunities for ATMA Participaes and Western Union

-0.07

Correlation Coefficient

ATMA Participaes  Western Union

Good diversification

The 3 months correlation between ATMA and Western is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ATMA Participaes SA and The Western Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and ATMA Participaes 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 ATMA Participaes SA are associated (or correlated) with Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of ATMA Participaes i.e., ATMA Participaes and Western Union go up and down completely randomly.

Pair Corralation between ATMA Participaes and Western Union

Assuming the 90 days trading horizon ATMA Participaes SA is expected to under-perform the Western Union. In addition to that, ATMA Participaes is 2.51 times more volatile than The Western Union. It trades about -0.21 of its total potential returns per unit of risk. The Western Union is currently generating about 0.16 per unit of volatility. If you would invest  6,291  in The Western Union on September 23, 2024 and sell it today you would earn a total of  334.00  from holding The Western Union or generate 5.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

ATMA Participaes SA  vs.  The Western Union

ATMA Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATMA Participaes 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Western Union

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Western Union are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Western Union is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATMA Participaes and Western Union

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

The idea behind ATMA Participaes SA and The Western Union 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.