Correlation Between ATMA Participaes and M Dias

Can any of the company-specific risk be diversified away by investing in both ATMA Participaes and M Dias 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 M Dias 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 M Dias Branco, you can compare the effects of market volatilities on ATMA Participaes and M Dias 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 M Dias. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATMA Participaes and M Dias.

Diversification Opportunities for ATMA Participaes and M Dias

0.82

Correlation Coefficient

ATMA Participaes  M Dias

Very poor diversification

The 3 months correlation between ATMA and MDIA3 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ATMA Participaes SA and M Dias Branco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Dias Branco 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 M Dias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Dias Branco has no effect on the direction of ATMA Participaes i.e., ATMA Participaes and M Dias go up and down completely randomly.

Pair Corralation between ATMA Participaes and M Dias

Assuming the 90 days trading horizon ATMA Participaes SA is expected to under-perform the M Dias. In addition to that, ATMA Participaes is 1.32 times more volatile than M Dias Branco. It trades about -0.12 of its total potential returns per unit of risk. M Dias Branco is currently generating about -0.11 per unit of volatility. If you would invest  2,527  in M Dias Branco on September 23, 2024 and sell it today you would lose (462.00) from holding M Dias Branco or give up 18.28% 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.  M Dias Branco

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.

M Dias Branco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Dias Branco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Pair Trading with ATMA Participaes and M Dias

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

The idea behind ATMA Participaes SA and M Dias Branco 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..