Correlation Between ATMOS and Sea

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

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

Diversification Opportunities for ATMOS and Sea

-0.59

Correlation Coefficient

ATMOS  Sea

Excellent diversification

The 3 months correlation between ATMOS and Sea is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ATMOS ENERGY P and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and ATMOS 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 ATMOS ENERGY P are associated (or correlated) with Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of ATMOS i.e., ATMOS and Sea go up and down completely randomly.

Pair Corralation between ATMOS and Sea

Assuming the 90 days trading horizon ATMOS ENERGY P is expected to under-perform the Sea. But the bond apears to be less risky and, when comparing its historical volatility, ATMOS ENERGY P is 2.45 times less risky than Sea. The bond trades about -0.23 of its potential returns per unit of risk. The Sea is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  11,446  in Sea on September 21, 2024 and sell it today you would lose (382.00) from holding Sea or give up 3.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.82%
Values	Daily Returns

ATMOS ENERGY P  vs.  Sea

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.

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.

Pair Trading with ATMOS and Sea

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

The idea behind ATMOS ENERGY P and Sea 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.