Correlation Between Atlas Corp and Focus Graphite

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

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

Diversification Opportunities for Atlas Corp and Focus Graphite

-0.65

Correlation Coefficient

Atlas Corp  Focus Graphite

Excellent diversification

The 3 months correlation between Atlas and Focus is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Corp and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite and Atlas Corp 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 Atlas Corp are associated (or correlated) with Focus Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Graphite has no effect on the direction of Atlas Corp i.e., Atlas Corp and Focus Graphite go up and down completely randomly.

Pair Corralation between Atlas Corp and Focus Graphite

Assuming the 90 days horizon Atlas Corp is expected to generate 0.04 times more return on investment than Focus Graphite. However, Atlas Corp is 24.05 times less risky than Focus Graphite. It trades about 0.07 of its potential returns per unit of risk. Focus Graphite is currently generating about -0.07 per unit of risk. If you would invest  2,471  in Atlas Corp on August 31, 2024 and sell it today you would earn a total of  37.00  from holding Atlas Corp or generate 1.5% return on investment over 90 days.

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

Atlas Corp  vs.  Focus Graphite

Atlas Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Focus Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Atlas Corp and Focus Graphite

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

The idea behind Atlas Corp and Focus Graphite 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 Anywhere module to track or share privately all of your investments from the convenience of any device.