Correlation Between ATT and Intouch Holdings

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

By analyzing existing cross correlation between ATT Inc and Intouch Holdings Public, you can compare the effects of market volatilities on ATT and Intouch Holdings 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 ATT with a short position of Intouch Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Intouch Holdings.

Diversification Opportunities for ATT and Intouch Holdings

0.63

Correlation Coefficient

ATT  Intouch Holdings

Poor diversification

The 3 months correlation between ATT and Intouch is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Intouch Holdings Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intouch Holdings Public and ATT 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 ATT Inc are associated (or correlated) with Intouch Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intouch Holdings Public has no effect on the direction of ATT i.e., ATT and Intouch Holdings go up and down completely randomly.

Pair Corralation between ATT and Intouch Holdings

Assuming the 90 days trading horizon ATT Inc is expected to generate 0.78 times more return on investment than Intouch Holdings. However, ATT Inc is 1.29 times less risky than Intouch Holdings. It trades about 0.23 of its potential returns per unit of risk. Intouch Holdings Public is currently generating about -0.22 per unit of risk. If you would invest  2,055  in ATT Inc on August 30, 2024 and sell it today you would earn a total of  145.00  from holding ATT Inc or generate 7.06% return on investment over 90 days.

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

ATT Inc  vs.  Intouch Holdings Public

ATT Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, ATT reported solid returns over the last few months and may actually be approaching a breakup point.

Intouch Holdings Public

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with ATT and Intouch Holdings

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

The idea behind ATT Inc and Intouch Holdings Public 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.