Correlation Between ATT and Genel Energy

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

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

Diversification Opportunities for ATT and Genel Energy

-0.59

Correlation Coefficient

ATT  Genel Energy

Excellent diversification

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

Pair Corralation between ATT and Genel Energy

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Genel Energy. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 2.7 times less risky than Genel Energy. The stock trades about -0.27 of its potential returns per unit of risk. The Genel Energy plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Genel Energy plc on October 12, 2024 and sell it today you would earn a total of  6.00  from holding Genel Energy plc or generate 7.32% return on investment over 90 days.

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

ATT Inc  vs.  Genel Energy plc

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.

Genel Energy plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ATT and Genel Energy

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

The idea behind ATT Inc and Genel Energy plc 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.