Correlation Between ATT and Leatt Corp

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

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

Diversification Opportunities for ATT and Leatt Corp

-0.64

Correlation Coefficient

ATT  Leatt Corp

Excellent diversification

The 3 months correlation between ATT and Leatt is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Leatt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatt Corp 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 Leatt Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatt Corp has no effect on the direction of ATT i.e., ATT and Leatt Corp go up and down completely randomly.

Pair Corralation between ATT and Leatt Corp

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.39 times more return on investment than Leatt Corp. However, ATT Inc is 2.54 times less risky than Leatt Corp. It trades about 0.2 of its potential returns per unit of risk. Leatt Corp is currently generating about 0.03 per unit of risk. If you would invest  1,716  in ATT Inc on September 12, 2024 and sell it today you would earn a total of  635.00  from holding ATT Inc or generate 37.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

ATT Inc  vs.  Leatt Corp

ATT Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Leatt Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leatt Corp 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ATT and Leatt Corp

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

The idea behind ATT Inc and Leatt Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.