Correlation Between ATT and CareRx

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

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

Diversification Opportunities for ATT and CareRx

-0.74

Correlation Coefficient

ATT  CareRx

Pay attention - limited upside

The 3 months correlation between ATT and CareRx is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and CareRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareRx 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 CareRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareRx has no effect on the direction of ATT i.e., ATT and CareRx go up and down completely randomly.

Pair Corralation between ATT and CareRx

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the CareRx. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 4.2 times less risky than CareRx. The stock trades about -0.05 of its potential returns per unit of risk. The CareRx is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  128.00  in CareRx on October 21, 2024 and sell it today you would earn a total of  13.00  from holding CareRx or generate 10.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

ATT Inc  vs.  CareRx

ATT Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CareRx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareRx has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, CareRx is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ATT and CareRx

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

The idea behind ATT Inc and CareRx 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..