Correlation Between First Abacus and ATN Holdings

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

By analyzing existing cross correlation between First Abacus Financial and ATN Holdings, you can compare the effects of market volatilities on First Abacus and ATN Holdings 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 First Abacus with a short position of ATN Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Abacus and ATN Holdings.

Diversification Opportunities for First Abacus and ATN Holdings

0.2

Correlation Coefficient

First Abacus  ATN Holdings

Modest diversification

The 3 months correlation between First and ATN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding First Abacus Financial and ATN Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN Holdings and First Abacus 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 First Abacus Financial are associated (or correlated) with ATN Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATN Holdings has no effect on the direction of First Abacus i.e., First Abacus and ATN Holdings go up and down completely randomly.

Pair Corralation between First Abacus and ATN Holdings

Assuming the 90 days trading horizon First Abacus is expected to generate 1.6 times less return on investment than ATN Holdings. In addition to that, First Abacus is 3.62 times more volatile than ATN Holdings. It trades about 0.03 of its total potential returns per unit of risk. ATN Holdings is currently generating about 0.16 per unit of volatility. If you would invest  42.00  in ATN Holdings on September 18, 2024 and sell it today you would earn a total of  7.00  from holding ATN Holdings or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.51%
Values	Daily Returns

First Abacus Financial  vs.  ATN Holdings

First Abacus Financial

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days First Abacus Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, First Abacus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ATN Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATN Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ATN Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Abacus and ATN Holdings

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

The idea behind First Abacus Financial and ATN Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.