Correlation Between Vitru and ATA Creativity

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

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

Diversification Opportunities for Vitru and ATA Creativity

0.23

Correlation Coefficient

Vitru  ATA Creativity

Modest diversification

The 3 months correlation between Vitru and ATA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vitru and ATA Creativity Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATA Creativity Global and Vitru 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 Vitru are associated (or correlated) with ATA Creativity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATA Creativity Global has no effect on the direction of Vitru i.e., Vitru and ATA Creativity go up and down completely randomly.

Pair Corralation between Vitru and ATA Creativity

Given the investment horizon of 90 days Vitru is expected to generate 0.53 times more return on investment than ATA Creativity. However, Vitru is 1.89 times less risky than ATA Creativity. It trades about -0.01 of its potential returns per unit of risk. ATA Creativity Global is currently generating about -0.01 per unit of risk. If you would invest  1,690  in Vitru on September 14, 2024 and sell it today you would lose (40.00) from holding Vitru or give up 2.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	10.94%
Values	Daily Returns

Vitru  vs.  ATA Creativity Global

Vitru

Risk-Adjusted Performance

0 of 100

Very Weak

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

ATA Creativity Global

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATA Creativity Global are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, ATA Creativity reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vitru and ATA Creativity

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

The idea behind Vitru and ATA Creativity Global 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.