Correlation Between ATT and Pegasus Tel

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

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

Diversification Opportunities for ATT and Pegasus Tel

-0.45

Correlation Coefficient

ATT  Pegasus Tel

Very good diversification

The 3 months correlation between ATT and Pegasus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Pegasus Tel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Tel 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 Pegasus Tel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Tel has no effect on the direction of ATT i.e., ATT and Pegasus Tel go up and down completely randomly.

Pair Corralation between ATT and Pegasus Tel

Taking into account the 90-day investment horizon ATT is expected to generate 14.68 times less return on investment than Pegasus Tel. But when comparing it to its historical volatility, ATT Inc is 11.66 times less risky than Pegasus Tel. It trades about 0.06 of its potential returns per unit of risk. Pegasus Tel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.12  in Pegasus Tel on September 11, 2024 and sell it today you would earn a total of  0.01  from holding Pegasus Tel or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

ATT Inc  vs.  Pegasus Tel

ATT Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pegasus Tel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pegasus Tel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with ATT and Pegasus Tel

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

The idea behind ATT Inc and Pegasus Tel 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.