Correlation Between Costco Wholesale and ATOSS SOFTWARE

Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and ATOSS SOFTWARE 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 Costco Wholesale and ATOSS SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Costco Wholesale Corp and ATOSS SOFTWARE, you can compare the effects of market volatilities on Costco Wholesale and ATOSS SOFTWARE 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 Costco Wholesale with a short position of ATOSS SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and ATOSS SOFTWARE.

Diversification Opportunities for Costco Wholesale and ATOSS SOFTWARE

-0.43

Correlation Coefficient

Costco Wholesale  ATOSS SOFTWARE

Very good diversification

The 3 months correlation between Costco and ATOSS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and ATOSS SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATOSS SOFTWARE and Costco Wholesale 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 Costco Wholesale Corp are associated (or correlated) with ATOSS SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATOSS SOFTWARE has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and ATOSS SOFTWARE go up and down completely randomly.

Pair Corralation between Costco Wholesale and ATOSS SOFTWARE

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the ATOSS SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Costco Wholesale Corp is 1.15 times less risky than ATOSS SOFTWARE. The stock trades about -0.03 of its potential returns per unit of risk. The ATOSS SOFTWARE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11,400  in ATOSS SOFTWARE on December 29, 2024 and sell it today you would earn a total of  1,200  from holding ATOSS SOFTWARE or generate 10.53% return on investment over 90 days.

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

Costco Wholesale Corp  vs.  ATOSS SOFTWARE

Costco Wholesale Corp

Risk-Adjusted Performance

Very Weak

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

ATOSS SOFTWARE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATOSS SOFTWARE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ATOSS SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Costco Wholesale and ATOSS SOFTWARE

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

The idea behind Costco Wholesale Corp and ATOSS SOFTWARE 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.