Correlation Between ATMA Participaes and HEDGE Brasil

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

By analyzing existing cross correlation between ATMA Participaes SA and HEDGE Brasil Shopping, you can compare the effects of market volatilities on ATMA Participaes and HEDGE Brasil 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 ATMA Participaes with a short position of HEDGE Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATMA Participaes and HEDGE Brasil.

Diversification Opportunities for ATMA Participaes and HEDGE Brasil

0.84

Correlation Coefficient

ATMA Participaes  HEDGE Brasil

Very poor diversification

The 3 months correlation between ATMA and HEDGE is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ATMA Participaes SA and HEDGE Brasil Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEDGE Brasil Shopping and ATMA Participaes 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 ATMA Participaes SA are associated (or correlated) with HEDGE Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEDGE Brasil Shopping has no effect on the direction of ATMA Participaes i.e., ATMA Participaes and HEDGE Brasil go up and down completely randomly.

Pair Corralation between ATMA Participaes and HEDGE Brasil

Assuming the 90 days trading horizon ATMA Participaes SA is expected to under-perform the HEDGE Brasil. In addition to that, ATMA Participaes is 3.28 times more volatile than HEDGE Brasil Shopping. It trades about -0.12 of its total potential returns per unit of risk. HEDGE Brasil Shopping is currently generating about -0.15 per unit of volatility. If you would invest  19,964  in HEDGE Brasil Shopping on September 23, 2024 and sell it today you would lose (1,934) from holding HEDGE Brasil Shopping or give up 9.69% of portfolio value over 90 days.

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

ATMA Participaes SA  vs.  HEDGE Brasil Shopping

ATMA Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATMA Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

HEDGE Brasil Shopping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEDGE Brasil Shopping has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with ATMA Participaes and HEDGE Brasil

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

The idea behind ATMA Participaes SA and HEDGE Brasil Shopping 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.