Correlation Between J Steel and ATON

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

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

Diversification Opportunities for J Steel and ATON

0.56

Correlation Coefficient

J Steel  ATON

Very weak diversification

The 3 months correlation between 023440 and ATON is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc and J Steel 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 J Steel Co are associated (or correlated) with ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of J Steel i.e., J Steel and ATON go up and down completely randomly.

Pair Corralation between J Steel and ATON

Assuming the 90 days trading horizon J Steel is expected to generate 1.43 times less return on investment than ATON. But when comparing it to its historical volatility, J Steel Co is 1.15 times less risky than ATON. It trades about 0.12 of its potential returns per unit of risk. ATON Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  382,500  in ATON Inc on September 13, 2024 and sell it today you would earn a total of  197,500  from holding ATON Inc or generate 51.63% return on investment over 90 days.

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

J Steel Co  vs.  ATON Inc

J Steel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in J Steel Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, J Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

ATON Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATON Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ATON sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with J Steel and ATON

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

The idea behind J Steel Co and ATON Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.