Correlation Between Valhi and Atea ASA

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

By analyzing existing cross correlation between Valhi Inc and Atea ASA, you can compare the effects of market volatilities on Valhi and Atea ASA 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 Valhi with a short position of Atea ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valhi and Atea ASA.

Diversification Opportunities for Valhi and Atea ASA

0.0

Correlation Coefficient

Valhi  Atea ASA

Pay attention - limited upside

The 3 months correlation between Valhi and Atea is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Valhi Inc and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA and Valhi 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 Valhi Inc are associated (or correlated) with Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Valhi i.e., Valhi and Atea ASA go up and down completely randomly.

Pair Corralation between Valhi and Atea ASA

Considering the 90-day investment horizon Valhi is expected to generate 1.71 times less return on investment than Atea ASA. But when comparing it to its historical volatility, Valhi Inc is 2.26 times less risky than Atea ASA. It trades about 0.05 of its potential returns per unit of risk. Atea ASA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,300  in Atea ASA on October 4, 2024 and sell it today you would earn a total of  102.00  from holding Atea ASA or generate 7.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	63.64%
Values	Daily Returns

Valhi Inc  vs.  Atea ASA

Valhi Inc

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Valhi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Atea ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Valhi and Atea ASA

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

The idea behind Valhi Inc and Atea ASA 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.