Correlation Between Access Power and ATN International

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

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

Diversification Opportunities for Access Power and ATN International

0.1

Correlation Coefficient

Access Power  ATN International

Average diversification

The 3 months correlation between Access and ATN is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Access Power Co and ATN International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN International and Access Power 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 Access Power Co are associated (or correlated) with ATN International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATN International has no effect on the direction of Access Power i.e., Access Power and ATN International go up and down completely randomly.

Pair Corralation between Access Power and ATN International

Given the investment horizon of 90 days Access Power Co is expected to generate 6.67 times more return on investment than ATN International. However, Access Power is 6.67 times more volatile than ATN International. It trades about 0.12 of its potential returns per unit of risk. ATN International is currently generating about -0.18 per unit of risk. If you would invest  0.16  in Access Power Co on September 22, 2024 and sell it today you would lose (0.02) from holding Access Power Co or give up 12.5% of portfolio value over 90 days.

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

Access Power Co  vs.  ATN International

Access Power

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Access Power Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Access Power reported solid returns over the last few months and may actually be approaching a breakup point.

ATN International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATN International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Access Power and ATN International

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

The idea behind Access Power Co and ATN International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.