Correlation Between ATN International and Lumen Technologies

Can any of the company-specific risk be diversified away by investing in both ATN International and Lumen Technologies 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 ATN International and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATN International and Lumen Technologies, you can compare the effects of market volatilities on ATN International and Lumen Technologies 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 ATN International with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATN International and Lumen Technologies.

Diversification Opportunities for ATN International and Lumen Technologies

-0.17

Correlation Coefficient

ATN International  Lumen Technologies

Good diversification

The 3 months correlation between ATN and Lumen is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding ATN International and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and ATN International 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 ATN International are associated (or correlated) with Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of ATN International i.e., ATN International and Lumen Technologies go up and down completely randomly.

Pair Corralation between ATN International and Lumen Technologies

Given the investment horizon of 90 days ATN International is expected to generate 0.69 times more return on investment than Lumen Technologies. However, ATN International is 1.44 times less risky than Lumen Technologies. It trades about 0.21 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.04 per unit of risk. If you would invest  1,666  in ATN International on December 18, 2024 and sell it today you would earn a total of  647.00  from holding ATN International or generate 38.84% return on investment over 90 days.

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

ATN International  vs.  Lumen Technologies

ATN International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATN International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, ATN International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lumen Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lumen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ATN International and Lumen Technologies

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

The idea behind ATN International and Lumen Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.