Correlation Between Strategic Investments and ATT

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

By analyzing existing cross correlation between Strategic Investments AS and ATT Inc, you can compare the effects of market volatilities on Strategic Investments and ATT 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 Strategic Investments with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and ATT.

Diversification Opportunities for Strategic Investments and ATT

-0.55

Correlation Coefficient

Strategic Investments  ATT

Excellent diversification

The 3 months correlation between Strategic and ATT is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Strategic Investments i.e., Strategic Investments and ATT go up and down completely randomly.

Pair Corralation between Strategic Investments and ATT

Assuming the 90 days horizon Strategic Investments AS is expected to generate 3.15 times more return on investment than ATT. However, Strategic Investments is 3.15 times more volatile than ATT Inc. It trades about 0.14 of its potential returns per unit of risk. ATT Inc is currently generating about -0.06 per unit of risk. If you would invest  13.00  in Strategic Investments AS on October 4, 2024 and sell it today you would earn a total of  1.00  from holding Strategic Investments AS or generate 7.69% return on investment over 90 days.

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

Strategic Investments AS  vs.  ATT Inc

Strategic Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Strategic Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ATT Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, ATT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Strategic Investments and ATT

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

The idea behind Strategic Investments AS and ATT Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.