Correlation Between Atome Energy and Associated British
Can any of the company-specific risk be diversified away by investing in both Atome Energy and Associated British 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 Atome Energy and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atome Energy PLC and Associated British Foods, you can compare the effects of market volatilities on Atome Energy and Associated British 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 Atome Energy with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atome Energy and Associated British.
Diversification Opportunities for Atome Energy and Associated British
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Atome and Associated is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Atome Energy PLC and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Atome Energy 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 Atome Energy PLC are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Atome Energy i.e., Atome Energy and Associated British go up and down completely randomly.
Pair Corralation between Atome Energy and Associated British
Assuming the 90 days trading horizon Atome Energy PLC is expected to generate 2.24 times more return on investment than Associated British. However, Atome Energy is 2.24 times more volatile than Associated British Foods. It trades about 0.03 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.29 per unit of risk. If you would invest 4,680 in Atome Energy PLC on October 26, 2024 and sell it today you would earn a total of 70.00 from holding Atome Energy PLC or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.62% |
| Values | Daily Returns |
Atome Energy PLC vs. Associated British Foods
Performance |
| Timeline |
| Atome Energy PLC |
| Associated British Foods |
Atome Energy and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atome Energy and Associated British
The main advantage of trading using opposite Atome Energy and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atome Energy position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Atome Energy vs. Associated British Foods | Atome Energy vs. Nordic Semiconductor ASA | Atome Energy vs. Ebro Foods | Atome Energy vs. Roper Technologies |
| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Toyota Motor Corp | Associated British vs. State Bank of |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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