Correlation Between Gen Digital and ATMA Participaes

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

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

Diversification Opportunities for Gen Digital and ATMA Participaes

-0.76

Correlation Coefficient

Gen Digital  ATMA Participaes

Pay attention - limited upside

The 3 months correlation between Gen and ATMA is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and ATMA Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMA Participaes and Gen Digital 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 Gen Digital 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 Gen Digital i.e., Gen Digital and ATMA Participaes go up and down completely randomly.

Pair Corralation between Gen Digital and ATMA Participaes

Assuming the 90 days trading horizon Gen Digital is expected to generate 31.28 times less return on investment than ATMA Participaes. But when comparing it to its historical volatility, Gen Digital is 38.77 times less risky than ATMA Participaes. It trades about 0.24 of its potential returns per unit of risk. ATMA Participaes SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  110.00  in ATMA Participaes SA on October 11, 2024 and sell it today you would earn a total of  17.00  from holding ATMA Participaes SA or generate 15.45% return on investment over 90 days.

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

Gen Digital  vs.  ATMA Participaes SA

Gen Digital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gen Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

ATMA Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATMA Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gen Digital and ATMA Participaes

The main advantage of trading using opposite Gen Digital and ATMA Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gen Digital 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 Gen Digital 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.