Correlation Between Equinix and ATMA Participaes

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Can any of the company-specific risk be diversified away by investing in both Equinix and ATMA Participaes 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 Equinix and ATMA Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and ATMA Participaes SA, you can compare the effects of market volatilities on Equinix and ATMA Participaes 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 Equinix with a short position of ATMA Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and ATMA Participaes.

Diversification Opportunities for Equinix and ATMA Participaes

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Equinix and ATMA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and ATMA Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMA Participaes and Equinix 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 Equinix are associated (or correlated) with ATMA Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATMA Participaes has no effect on the direction of Equinix i.e., Equinix and ATMA Participaes go up and down completely randomly.

Pair Corralation between Equinix and ATMA Participaes

Assuming the 90 days trading horizon Equinix is expected to under-perform the ATMA Participaes. But the stock apears to be less risky and, when comparing its historical volatility, Equinix is 2.1 times less risky than ATMA Participaes. The stock trades about -0.2 of its potential returns per unit of risk. The ATMA Participaes SA is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  122.00  in ATMA Participaes SA on November 2, 2024 and sell it today you would lose (10.00) from holding ATMA Participaes SA or give up 8.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Equinix  vs.  ATMA Participaes SA

 Performance 
       Timeline  
Equinix 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Equinix may actually be approaching a critical reversion point that can send shares even higher in March 2025.
ATMA Participaes 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ATMA Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Equinix and ATMA Participaes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Equinix and ATMA Participaes

The main advantage of trading using opposite Equinix and ATMA Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, ATMA Participaes 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 ATMA Participaes will offset losses from the drop in ATMA Participaes' long position.
The idea behind Equinix and ATMA Participaes SA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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