Correlation Between Atesco Industrial and South Books

Can any of the company-specific risk be diversified away by investing in both Atesco Industrial and South Books 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 Atesco Industrial and South Books into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atesco Industrial Cartering and South Books Educational, you can compare the effects of market volatilities on Atesco Industrial and South Books 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 Atesco Industrial with a short position of South Books. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atesco Industrial and South Books.

Diversification Opportunities for Atesco Industrial and South Books

0.67

Correlation Coefficient

Atesco Industrial  South Books

Poor diversification

The 3 months correlation between Atesco and South is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Atesco Industrial Cartering and South Books Educational in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Books Educational and Atesco Industrial 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 Atesco Industrial Cartering are associated (or correlated) with South Books. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Books Educational has no effect on the direction of Atesco Industrial i.e., Atesco Industrial and South Books go up and down completely randomly.

Pair Corralation between Atesco Industrial and South Books

Assuming the 90 days trading horizon Atesco Industrial Cartering is expected to generate 2.57 times more return on investment than South Books. However, Atesco Industrial is 2.57 times more volatile than South Books Educational. It trades about 0.11 of its potential returns per unit of risk. South Books Educational is currently generating about 0.01 per unit of risk. If you would invest  1,470,000  in Atesco Industrial Cartering on December 22, 2024 and sell it today you would earn a total of  370,000  from holding Atesco Industrial Cartering or generate 25.17% return on investment over 90 days.

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

Atesco Industrial Cartering  vs.  South Books Educational

Atesco Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atesco Industrial Cartering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Atesco Industrial displayed solid returns over the last few months and may actually be approaching a breakup point.

South Books Educational

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in South Books Educational are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, South Books is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Atesco Industrial and South Books

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

The idea behind Atesco Industrial Cartering and South Books Educational 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.