Correlation Between Atea ASA and SCOR SE

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

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

Diversification Opportunities for Atea ASA and SCOR SE

0.88

Correlation Coefficient

Atea ASA  SCOR SE

Very poor diversification

The 3 months correlation between Atea and SCOR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Atea ASA and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE and Atea ASA 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 Atea ASA are associated (or correlated) with SCOR SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR SE has no effect on the direction of Atea ASA i.e., Atea ASA and SCOR SE go up and down completely randomly.

Pair Corralation between Atea ASA and SCOR SE

Assuming the 90 days trading horizon Atea ASA is expected to generate 1.1 times more return on investment than SCOR SE. However, Atea ASA is 1.1 times more volatile than SCOR SE. It trades about 0.0 of its potential returns per unit of risk. SCOR SE is currently generating about -0.09 per unit of risk. If you would invest  1,146  in Atea ASA on September 24, 2024 and sell it today you would lose (2.00) from holding Atea ASA or give up 0.17% of portfolio value over 90 days.

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

Atea ASA  vs.  SCOR SE

Atea ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atea ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Atea ASA exhibited solid returns over the last few months and may actually be approaching a breakup point.

SCOR SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SCOR SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atea ASA and SCOR SE

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

The idea behind Atea ASA and SCOR SE 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.