Correlation Between Atinum Investment and Fine Besteel

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

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

Diversification Opportunities for Atinum Investment and Fine Besteel

0.11

Correlation Coefficient

Atinum Investment  Fine Besteel

Average diversification

The 3 months correlation between Atinum and Fine is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Atinum Investment Co and Fine Besteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Besteel and Atinum Investment 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 Atinum Investment Co are associated (or correlated) with Fine Besteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Besteel has no effect on the direction of Atinum Investment i.e., Atinum Investment and Fine Besteel go up and down completely randomly.

Pair Corralation between Atinum Investment and Fine Besteel

Assuming the 90 days trading horizon Atinum Investment is expected to generate 11.98 times less return on investment than Fine Besteel. But when comparing it to its historical volatility, Atinum Investment Co is 1.4 times less risky than Fine Besteel. It trades about 0.01 of its potential returns per unit of risk. Fine Besteel Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  87,700  in Fine Besteel Co on September 4, 2024 and sell it today you would earn a total of  13,500  from holding Fine Besteel Co or generate 15.39% return on investment over 90 days.

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

Atinum Investment Co  vs.  Fine Besteel Co

Atinum Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atinum Investment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Atinum Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fine Besteel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fine Besteel Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fine Besteel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atinum Investment and Fine Besteel

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

The idea behind Atinum Investment Co and Fine Besteel Co 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.