Correlation Between Construction JSC and Atesco Industrial

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

By analyzing existing cross correlation between Construction JSC No5 and Atesco Industrial Cartering, you can compare the effects of market volatilities on Construction JSC and Atesco Industrial 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 Construction JSC with a short position of Atesco Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction JSC and Atesco Industrial.

Diversification Opportunities for Construction JSC and Atesco Industrial

0.08

Correlation Coefficient

Construction JSC  Atesco Industrial

Significant diversification

The 3 months correlation between Construction and Atesco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Construction JSC No5 and Atesco Industrial Cartering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atesco Industrial and Construction JSC 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 Construction JSC No5 are associated (or correlated) with Atesco Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atesco Industrial has no effect on the direction of Construction JSC i.e., Construction JSC and Atesco Industrial go up and down completely randomly.

Pair Corralation between Construction JSC and Atesco Industrial

Assuming the 90 days trading horizon Construction JSC No5 is expected to under-perform the Atesco Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Construction JSC No5 is 1.47 times less risky than Atesco Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The Atesco Industrial Cartering is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,270,000  in Atesco Industrial Cartering on December 2, 2024 and sell it today you would earn a total of  730,000  from holding Atesco Industrial Cartering or generate 57.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	58.33%
Values	Daily Returns

Construction JSC No5  vs.  Atesco Industrial Cartering

Construction JSC No5

Risk-Adjusted Performance

Very Weak

Over the last 90 days Construction JSC No5 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Construction JSC is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Atesco Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atesco Industrial Cartering are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Atesco Industrial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Construction JSC and Atesco Industrial

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

The idea behind Construction JSC No5 and Atesco Industrial Cartering 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.