Correlation Between Sea and ATMOS

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

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

Diversification Opportunities for Sea and ATMOS

-0.62

Correlation Coefficient

Sea  ATMOS

Excellent diversification

The 3 months correlation between Sea and ATMOS is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sea and ATMOS ENERGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMOS ENERGY P and Sea 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 Sea are associated (or correlated) with ATMOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATMOS ENERGY P has no effect on the direction of Sea i.e., Sea and ATMOS go up and down completely randomly.

Pair Corralation between Sea and ATMOS

Allowing for the 90-day total investment horizon Sea is expected to generate 5.04 times more return on investment than ATMOS. However, Sea is 5.04 times more volatile than ATMOS ENERGY P. It trades about 0.15 of its potential returns per unit of risk. ATMOS ENERGY P is currently generating about -0.18 per unit of risk. If you would invest  9,067  in Sea on September 21, 2024 and sell it today you would earn a total of  1,994  from holding Sea or generate 21.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.94%
Values	Daily Returns

Sea  vs.  ATMOS ENERGY P

Sea

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

ATMOS ENERGY P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATMOS ENERGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ATMOS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sea and ATMOS

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

The idea behind Sea and ATMOS ENERGY P 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.

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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.