Correlation Between Stellar and Atlantis

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

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

Diversification Opportunities for Stellar and Atlantis

0.55

Correlation Coefficient

Stellar  Atlantis

Very weak diversification

The 3 months correlation between Stellar and Atlantis is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Atlantis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantis SA and Stellar 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 Stellar are associated (or correlated) with Atlantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantis SA has no effect on the direction of Stellar i.e., Stellar and Atlantis go up and down completely randomly.

Pair Corralation between Stellar and Atlantis

Assuming the 90 days trading horizon Stellar is expected to generate 10.14 times less return on investment than Atlantis. In addition to that, Stellar is 1.28 times more volatile than Atlantis SA. It trades about 0.04 of its total potential returns per unit of risk. Atlantis SA is currently generating about 0.46 per unit of volatility. If you would invest  11.00  in Atlantis SA on October 9, 2024 and sell it today you would earn a total of  6.00  from holding Atlantis SA or generate 54.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.0%
Values	Daily Returns

Stellar  vs.  Atlantis SA

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Atlantis SA

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantis SA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Atlantis reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stellar and Atlantis

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

The idea behind Stellar and Atlantis 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.