Correlation Between ATRESMEDIA and CAIRN HOMES

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

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

Diversification Opportunities for ATRESMEDIA and CAIRN HOMES

-0.42

Correlation Coefficient

ATRESMEDIA  CAIRN HOMES

Very good diversification

The 3 months correlation between ATRESMEDIA and CAIRN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ATRESMEDIA and CAIRN HOMES EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAIRN HOMES EO and ATRESMEDIA 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 ATRESMEDIA are associated (or correlated) with CAIRN HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAIRN HOMES EO has no effect on the direction of ATRESMEDIA i.e., ATRESMEDIA and CAIRN HOMES go up and down completely randomly.

Pair Corralation between ATRESMEDIA and CAIRN HOMES

Assuming the 90 days trading horizon ATRESMEDIA is expected to generate 1.38 times less return on investment than CAIRN HOMES. But when comparing it to its historical volatility, ATRESMEDIA is 1.6 times less risky than CAIRN HOMES. It trades about 0.1 of its potential returns per unit of risk. CAIRN HOMES EO is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  95.00  in CAIRN HOMES EO on December 6, 2024 and sell it today you would earn a total of  116.00  from holding CAIRN HOMES EO or generate 122.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

ATRESMEDIA  vs.  CAIRN HOMES EO

ATRESMEDIA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATRESMEDIA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ATRESMEDIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

CAIRN HOMES EO

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ATRESMEDIA and CAIRN HOMES

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

The idea behind ATRESMEDIA and CAIRN HOMES EO 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.