Correlation Between ATS P and Hammond Power
Can any of the company-specific risk be diversified away by investing in both ATS P and Hammond Power 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 ATS P and Hammond Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATS P and Hammond Power Solutions, you can compare the effects of market volatilities on ATS P and Hammond Power 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 ATS P with a short position of Hammond Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATS P and Hammond Power.
Diversification Opportunities for ATS P and Hammond Power
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATS and Hammond is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ATS P and Hammond Power Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammond Power Solutions and ATS P 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 ATS P are associated (or correlated) with Hammond Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammond Power Solutions has no effect on the direction of ATS P i.e., ATS P and Hammond Power go up and down completely randomly.
Pair Corralation between ATS P and Hammond Power
Assuming the 90 days trading horizon ATS P is expected to generate 0.42 times more return on investment than Hammond Power. However, ATS P is 2.37 times less risky than Hammond Power. It trades about -0.3 of its potential returns per unit of risk. Hammond Power Solutions is currently generating about -0.28 per unit of risk. If you would invest 4,217 in ATS P on November 6, 2024 and sell it today you would lose (406.00) from holding ATS P or give up 9.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATS P vs. Hammond Power Solutions
Performance |
| Timeline |
| ATS P |
| Hammond Power Solutions |
ATS P and Hammond Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATS P and Hammond Power
The main advantage of trading using opposite ATS P and Hammond Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATS P position performs unexpectedly, Hammond Power 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 Hammond Power will offset losses from the drop in Hammond Power's long position.| ATS P vs. Trisura Group | ATS P vs. Brookfield | ATS P vs. Storage Vault Canada | ATS P vs. Brookfield Asset Management |
| Hammond Power vs. Hammond Manufacturing | Hammond Power vs. Firan Technology Group | Hammond Power vs. Supremex | Hammond Power vs. Geodrill Limited |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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