Correlation Between ATT and Sika AG

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

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

Diversification Opportunities for ATT and Sika AG

0.81

Correlation Coefficient

ATT  Sika AG

Very poor diversification

The 3 months correlation between ATT and Sika is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Sika AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG ADR 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG ADR has no effect on the direction of ATT i.e., ATT and Sika AG go up and down completely randomly.

Pair Corralation between ATT and Sika AG

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.96 times more return on investment than Sika AG. However, ATT Inc is 1.04 times less risky than Sika AG. It trades about 0.21 of its potential returns per unit of risk. Sika AG ADR is currently generating about 0.07 per unit of risk. If you would invest  2,267  in ATT Inc on December 25, 2024 and sell it today you would earn a total of  464.00  from holding ATT Inc or generate 20.47% return on investment over 90 days.

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

ATT Inc  vs.  Sika AG ADR

ATT Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sika AG ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sika AG ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sika AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ATT and Sika AG

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

The idea behind ATT Inc and Sika AG ADR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.