Correlation Between ATP 30 and CP ALL

Can any of the company-specific risk be diversified away by investing in both ATP 30 and CP ALL 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 ATP 30 and CP ALL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATP 30 Public and CP ALL Public, you can compare the effects of market volatilities on ATP 30 and CP ALL 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 ATP 30 with a short position of CP ALL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATP 30 and CP ALL.

Diversification Opportunities for ATP 30 and CP ALL

-0.19

Correlation Coefficient

ATP 30  CP ALL

Good diversification

The 3 months correlation between ATP and CPALL-R is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ATP 30 Public and CP ALL Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CP ALL Public and ATP 30 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 ATP 30 Public are associated (or correlated) with CP ALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CP ALL Public has no effect on the direction of ATP 30 i.e., ATP 30 and CP ALL go up and down completely randomly.

Pair Corralation between ATP 30 and CP ALL

Assuming the 90 days trading horizon ATP 30 Public is expected to generate 2.15 times more return on investment than CP ALL. However, ATP 30 is 2.15 times more volatile than CP ALL Public. It trades about 0.09 of its potential returns per unit of risk. CP ALL Public is currently generating about -0.03 per unit of risk. If you would invest  91.00  in ATP 30 Public on September 12, 2024 and sell it today you would earn a total of  11.00  from holding ATP 30 Public or generate 12.09% return on investment over 90 days.

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

ATP 30 Public  vs.  CP ALL Public

ATP 30 Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATP 30 Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, ATP 30 sustained solid returns over the last few months and may actually be approaching a breakup point.

CP ALL Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, CP ALL is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ATP 30 and CP ALL

The main advantage of trading using opposite ATP 30 and CP ALL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATP 30 position performs unexpectedly, CP ALL 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 CP ALL will offset losses from the drop in CP ALL's long position.

The idea behind ATP 30 Public and CP ALL Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.