Correlation Between Walgreens Boots and ATEME SA

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

By analyzing existing cross correlation between Walgreens Boots Alliance and ATEME SA, you can compare the effects of market volatilities on Walgreens Boots and ATEME SA 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 Walgreens Boots with a short position of ATEME SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and ATEME SA.

Diversification Opportunities for Walgreens Boots and ATEME SA

0.35

Correlation Coefficient

Walgreens Boots  ATEME SA

Weak diversification

The 3 months correlation between Walgreens and ATEME is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and ATEME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATEME SA and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with ATEME SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATEME SA has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and ATEME SA go up and down completely randomly.

Pair Corralation between Walgreens Boots and ATEME SA

Considering the 90-day investment horizon Walgreens Boots is expected to generate 3.04 times less return on investment than ATEME SA. In addition to that, Walgreens Boots is 1.11 times more volatile than ATEME SA. It trades about 0.06 of its total potential returns per unit of risk. ATEME SA is currently generating about 0.21 per unit of volatility. If you would invest  356.00  in ATEME SA on September 24, 2024 and sell it today you would earn a total of  214.00  from holding ATEME SA or generate 60.11% return on investment over 90 days.

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

Walgreens Boots Alliance  vs.  ATEME SA

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

ATEME SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATEME SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ATEME SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and ATEME SA

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

The idea behind Walgreens Boots Alliance and ATEME SA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.