Correlation Between Halliburton and ATMA Participaes

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

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

Diversification Opportunities for Halliburton and ATMA Participaes

0.12

Correlation Coefficient

Halliburton  ATMA Participaes

Average diversification

The 3 months correlation between Halliburton and ATMA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and ATMA Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMA Participaes and Halliburton 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 Halliburton are associated (or correlated) with ATMA Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATMA Participaes has no effect on the direction of Halliburton i.e., Halliburton and ATMA Participaes go up and down completely randomly.

Pair Corralation between Halliburton and ATMA Participaes

Assuming the 90 days trading horizon Halliburton is expected to under-perform the ATMA Participaes. But the stock apears to be less risky and, when comparing its historical volatility, Halliburton is 1.27 times less risky than ATMA Participaes. The stock trades about -0.07 of its potential returns per unit of risk. The ATMA Participaes SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  111.00  in ATMA Participaes SA on December 24, 2024 and sell it today you would earn a total of  1.00  from holding ATMA Participaes SA or generate 0.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Halliburton  vs.  ATMA Participaes SA

Halliburton

Risk-Adjusted Performance

Very Weak

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

ATMA Participaes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATMA Participaes SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATMA Participaes is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Halliburton and ATMA Participaes

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

The idea behind Halliburton and ATMA Participaes SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.