Correlation Between Atom Empreendimentos and Recrusul

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

By analyzing existing cross correlation between Atom Empreendimentos e and Recrusul SA, you can compare the effects of market volatilities on Atom Empreendimentos and Recrusul 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 Atom Empreendimentos with a short position of Recrusul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atom Empreendimentos and Recrusul.

Diversification Opportunities for Atom Empreendimentos and Recrusul

0.89

Correlation Coefficient

Atom Empreendimentos  Recrusul

Very poor diversification

The 3 months correlation between Atom and Recrusul is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Atom Empreendimentos e and Recrusul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recrusul SA and Atom Empreendimentos 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 Atom Empreendimentos e are associated (or correlated) with Recrusul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recrusul SA has no effect on the direction of Atom Empreendimentos i.e., Atom Empreendimentos and Recrusul go up and down completely randomly.

Pair Corralation between Atom Empreendimentos and Recrusul

Assuming the 90 days trading horizon Atom Empreendimentos e is expected to generate 1.36 times more return on investment than Recrusul. However, Atom Empreendimentos is 1.36 times more volatile than Recrusul SA. It trades about 0.13 of its potential returns per unit of risk. Recrusul SA is currently generating about 0.14 per unit of risk. If you would invest  215.00  in Atom Empreendimentos e on September 12, 2024 and sell it today you would earn a total of  170.00  from holding Atom Empreendimentos e or generate 79.07% return on investment over 90 days.

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

Atom Empreendimentos e  vs.  Recrusul SA

Atom Empreendimentos

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atom Empreendimentos e are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Atom Empreendimentos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Recrusul SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Recrusul unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atom Empreendimentos and Recrusul

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

The idea behind Atom Empreendimentos e and Recrusul SA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.