Correlation Between South Basic and Atesco Industrial

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

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

Diversification Opportunities for South Basic and Atesco Industrial

-0.62

Correlation Coefficient

South Basic  Atesco Industrial

Excellent diversification

The 3 months correlation between South and Atesco is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and Atesco Industrial Cartering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atesco Industrial and South Basic 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 South Basic Chemicals are associated (or correlated) with Atesco Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atesco Industrial has no effect on the direction of South Basic i.e., South Basic and Atesco Industrial go up and down completely randomly.

Pair Corralation between South Basic and Atesco Industrial

Assuming the 90 days trading horizon South Basic Chemicals is expected to under-perform the Atesco Industrial. But the stock apears to be less risky and, when comparing its historical volatility, South Basic Chemicals is 4.2 times less risky than Atesco Industrial. The stock trades about -0.13 of its potential returns per unit of risk. The Atesco Industrial Cartering is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,500,000  in Atesco Industrial Cartering on December 29, 2024 and sell it today you would lose (100,000) from holding Atesco Industrial Cartering or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	69.49%
Values	Daily Returns

South Basic Chemicals  vs.  Atesco Industrial Cartering

South Basic Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days South Basic Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Atesco Industrial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with South Basic and Atesco Industrial

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

The idea behind South Basic Chemicals and Atesco Industrial Cartering 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.