Correlation Between Engie SA and Atco

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

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

Diversification Opportunities for Engie SA and Atco

-0.25

Correlation Coefficient

Engie SA  Atco

Very good diversification

The 3 months correlation between Engie and Atco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA ADR and Atco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco and Engie SA 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 Engie SA ADR are associated (or correlated) with Atco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco has no effect on the direction of Engie SA i.e., Engie SA and Atco go up and down completely randomly.

Pair Corralation between Engie SA and Atco

Assuming the 90 days horizon Engie SA ADR is expected to under-perform the Atco. But the pink sheet apears to be less risky and, when comparing its historical volatility, Engie SA ADR is 1.1 times less risky than Atco. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Atco is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,341  in Atco on August 31, 2024 and sell it today you would earn a total of  140.00  from holding Atco or generate 4.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Engie SA ADR  vs.  Atco

Engie SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Atco

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atco are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Atco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Engie SA and Atco

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

The idea behind Engie SA ADR and Atco 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.