Correlation Between Western Digital and Atea ASA

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

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

Diversification Opportunities for Western Digital and Atea ASA

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Correlation Coefficient

Western Digital  Atea ASA

Pay attention - limited upside

The 3 months correlation between Western and Atea is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA and Western Digital 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 Western Digital 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 Western Digital i.e., Western Digital and Atea ASA go up and down completely randomly.

Pair Corralation between Western Digital and Atea ASA

Considering the 90-day investment horizon Western Digital is expected to generate 2.3 times less return on investment than Atea ASA. But when comparing it to its historical volatility, Western Digital is 3.66 times less risky than Atea ASA. It trades about 0.07 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

Western Digital  vs.  Atea ASA

Western Digital

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Western Digital and Atea ASA

The main advantage of trading using opposite Western Digital and Atea ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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 Western Digital 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.