Correlation Between Atos SE and Cresco Labs

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

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

Diversification Opportunities for Atos SE and Cresco Labs

0.68

Correlation Coefficient

Atos SE  Cresco Labs

Poor diversification

The 3 months correlation between Atos and Cresco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Atos SE and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs and Atos SE 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 Atos SE are associated (or correlated) with Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Atos SE i.e., Atos SE and Cresco Labs go up and down completely randomly.

Pair Corralation between Atos SE and Cresco Labs

Assuming the 90 days horizon Atos SE is expected to generate 25.4 times more return on investment than Cresco Labs. However, Atos SE is 25.4 times more volatile than Cresco Labs. It trades about 0.11 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.14 per unit of risk. If you would invest  68.00  in Atos SE on September 24, 2024 and sell it today you would lose (67.79) from holding Atos SE or give up 99.69% of portfolio value over 90 days.

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

Atos SE  vs.  Cresco Labs

Atos SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atos SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Atos SE reported solid returns over the last few months and may actually be approaching a breakup point.

Cresco Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cresco Labs 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Atos SE and Cresco Labs

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

The idea behind Atos SE and Cresco Labs 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.