Correlation Between Top Frontier and ATN Holdings

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

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

Diversification Opportunities for Top Frontier and ATN Holdings

-0.24

Correlation Coefficient

Top Frontier  ATN Holdings

Very good diversification

The 3 months correlation between Top and ATN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and ATN Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN Holdings and Top Frontier 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 Top Frontier Investment 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 Top Frontier i.e., Top Frontier and ATN Holdings go up and down completely randomly.

Pair Corralation between Top Frontier and ATN Holdings

Assuming the 90 days trading horizon Top Frontier is expected to generate 10.59 times less return on investment than ATN Holdings. In addition to that, Top Frontier is 2.42 times more volatile than ATN Holdings. It trades about 0.01 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 Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Top Frontier Investment  vs.  ATN Holdings

Top Frontier Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Top Frontier is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Top Frontier and ATN Holdings

The main advantage of trading using opposite Top Frontier and ATN Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Frontier 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 Top Frontier Investment 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.