Correlation Between Oi SA and ATT

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Can any of the company-specific risk be diversified away by investing in both Oi SA and ATT 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 Oi SA and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oi SA and ATT Inc, you can compare the effects of market volatilities on Oi SA and ATT 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 Oi SA with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oi SA and ATT.

Diversification Opportunities for Oi SA and ATT

-0.88
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between OIBR3 and ATT is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Oi SA and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Oi SA 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 Oi SA are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Oi SA i.e., Oi SA and ATT go up and down completely randomly.

Pair Corralation between Oi SA and ATT

Assuming the 90 days trading horizon Oi SA is expected to under-perform the ATT. In addition to that, Oi SA is 2.49 times more volatile than ATT Inc. It trades about -0.14 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.08 per unit of volatility. If you would invest  4,489  in ATT Inc on September 24, 2024 and sell it today you would earn a total of  126.00  from holding ATT Inc or generate 2.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Oi SA  vs.  ATT Inc

 Performance 
       Timeline  
Oi SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Oi 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.
ATT Inc 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ATT sustained solid returns over the last few months and may actually be approaching a breakup point.

Oi SA and ATT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oi SA and ATT

The main advantage of trading using opposite Oi SA and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oi SA position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.
The idea behind Oi SA and ATT Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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