Correlation Between Canadian Utilities and ATRESMEDIA

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

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

Diversification Opportunities for Canadian Utilities and ATRESMEDIA

0.05

Correlation Coefficient

Canadian Utilities  ATRESMEDIA

Significant diversification

The 3 months correlation between Canadian and ATRESMEDIA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and ATRESMEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRESMEDIA and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with ATRESMEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRESMEDIA has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and ATRESMEDIA go up and down completely randomly.

Pair Corralation between Canadian Utilities and ATRESMEDIA

Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the ATRESMEDIA. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 1.57 times less risky than ATRESMEDIA. The stock trades about -0.03 of its potential returns per unit of risk. The ATRESMEDIA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  429.00  in ATRESMEDIA on November 29, 2024 and sell it today you would earn a total of  49.00  from holding ATRESMEDIA or generate 11.42% return on investment over 90 days.

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

Canadian Utilities Limited  vs.  ATRESMEDIA

Canadian Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian Utilities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canadian Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ATRESMEDIA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATRESMEDIA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ATRESMEDIA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Canadian Utilities and ATRESMEDIA

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

The idea behind Canadian Utilities Limited and ATRESMEDIA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.