Correlation Between CMG Cleantech and ATEME SA

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

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

Diversification Opportunities for CMG Cleantech and ATEME SA

0.59

Correlation Coefficient

CMG Cleantech  ATEME SA

Very weak diversification

The 3 months correlation between CMG and ATEME is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CMG Cleantech SA and ATEME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATEME SA and CMG Cleantech 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 CMG Cleantech SA are associated (or correlated) with ATEME SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATEME SA has no effect on the direction of CMG Cleantech i.e., CMG Cleantech and ATEME SA go up and down completely randomly.

Pair Corralation between CMG Cleantech and ATEME SA

Assuming the 90 days trading horizon CMG Cleantech is expected to generate 4.85 times less return on investment than ATEME SA. But when comparing it to its historical volatility, CMG Cleantech SA is 1.35 times less risky than ATEME SA. It trades about 0.03 of its potential returns per unit of risk. ATEME SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  540.00  in ATEME SA on October 5, 2024 and sell it today you would earn a total of  30.00  from holding ATEME SA or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

CMG Cleantech SA  vs.  ATEME SA

CMG Cleantech SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CMG Cleantech SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CMG Cleantech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ATEME SA

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATEME SA are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ATEME SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CMG Cleantech and ATEME SA

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

The idea behind CMG Cleantech SA and ATEME 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.