Correlation Between Vale SA and Atrys Health

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

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

Diversification Opportunities for Vale SA and Atrys Health

-0.06

Correlation Coefficient

Vale SA  Atrys Health

Good diversification

The 3 months correlation between Vale and Atrys is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Atrys Health SL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrys Health SL and Vale SA 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 Vale SA are associated (or correlated) with Atrys Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrys Health SL has no effect on the direction of Vale SA i.e., Vale SA and Atrys Health go up and down completely randomly.

Pair Corralation between Vale SA and Atrys Health

Assuming the 90 days trading horizon Vale SA is expected to generate 3.68 times less return on investment than Atrys Health. But when comparing it to its historical volatility, Vale SA is 1.17 times less risky than Atrys Health. It trades about 0.03 of its potential returns per unit of risk. Atrys Health SL is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  307.00  in Atrys Health SL on December 4, 2024 and sell it today you would earn a total of  32.00  from holding Atrys Health SL or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Vale SA  vs.  Atrys Health SL

Vale SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Vale SA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Atrys Health SL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atrys Health SL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Atrys Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vale SA and Atrys Health

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

The idea behind Vale SA and Atrys Health SL 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.