Correlation Between Atacado SA and Kontoor Brands
Can any of the company-specific risk be diversified away by investing in both Atacado SA and Kontoor Brands 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 Atacado SA and Kontoor Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atacado SA and Kontoor Brands, you can compare the effects of market volatilities on Atacado SA and Kontoor Brands 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 Atacado SA with a short position of Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atacado SA and Kontoor Brands.
Diversification Opportunities for Atacado SA and Kontoor Brands
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atacado and Kontoor is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Atacado SA and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands and Atacado 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 Atacado SA are associated (or correlated) with Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Atacado SA i.e., Atacado SA and Kontoor Brands go up and down completely randomly.
Pair Corralation between Atacado SA and Kontoor Brands
Assuming the 90 days horizon Atacado SA is expected to generate 36.07 times less return on investment than Kontoor Brands. But when comparing it to its historical volatility, Atacado SA is 48.93 times less risky than Kontoor Brands. It trades about 0.12 of its potential returns per unit of risk. Kontoor Brands is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,693 in Kontoor Brands on September 14, 2024 and sell it today you would earn a total of 5,251 from holding Kontoor Brands or generate 142.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 27.07% |
| Values | Daily Returns |
Atacado SA vs. Kontoor Brands
Performance |
| Timeline |
| Atacado SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kontoor Brands |
Atacado SA and Kontoor Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atacado SA and Kontoor Brands
The main advantage of trading using opposite Atacado SA and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atacado SA position performs unexpectedly, Kontoor Brands 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 Kontoor Brands will offset losses from the drop in Kontoor Brands' long position.| Atacado SA vs. CF Industries Holdings | Atacado SA vs. Flexible Solutions International | Atacado SA vs. Ecovyst | Atacado SA vs. Where Food Comes |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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