Correlation Between Atos SE and CHINA WATER
Can any of the company-specific risk be diversified away by investing in both Atos SE and CHINA WATER 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 CHINA WATER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atos SE and CHINA WATER IGR, you can compare the effects of market volatilities on Atos SE and CHINA WATER 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 CHINA WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atos SE and CHINA WATER.
Diversification Opportunities for Atos SE and CHINA WATER
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atos and CHINA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Atos SE and CHINA WATER IGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA WATER IGR 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 CHINA WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA WATER IGR has no effect on the direction of Atos SE i.e., Atos SE and CHINA WATER go up and down completely randomly.
Pair Corralation between Atos SE and CHINA WATER
Assuming the 90 days horizon Atos SE is expected to under-perform the CHINA WATER. In addition to that, Atos SE is 4.68 times more volatile than CHINA WATER IGR. It trades about -0.04 of its total potential returns per unit of risk. CHINA WATER IGR is currently generating about -0.07 per unit of volatility. If you would invest 4.00 in CHINA WATER IGR on September 25, 2024 and sell it today you would lose (1.00) from holding CHINA WATER IGR or give up 25.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Atos SE vs. CHINA WATER IGR
Performance |
Timeline |
Atos SE |
CHINA WATER IGR |
Atos SE and CHINA WATER Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Atos SE and CHINA WATER
The main advantage of trading using opposite Atos SE and CHINA WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atos SE position performs unexpectedly, CHINA WATER 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 CHINA WATER will offset losses from the drop in CHINA WATER's long position.Atos SE vs. Accenture plc | Atos SE vs. International Business Machines | Atos SE vs. Infosys Limited | Atos SE vs. Cognizant Technology Solutions |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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