Correlation Between Flex and Atco Mining
Can any of the company-specific risk be diversified away by investing in both Flex and Atco Mining 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 Flex and Atco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex and Atco Mining, you can compare the effects of market volatilities on Flex and Atco Mining 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 Flex with a short position of Atco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex and Atco Mining.
Diversification Opportunities for Flex and Atco Mining
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flex and Atco is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Flex and Atco Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco Mining and Flex 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 Flex are associated (or correlated) with Atco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco Mining has no effect on the direction of Flex i.e., Flex and Atco Mining go up and down completely randomly.
Pair Corralation between Flex and Atco Mining
Given the investment horizon of 90 days Flex is expected to generate 0.16 times more return on investment than Atco Mining. However, Flex is 6.14 times less risky than Atco Mining. It trades about 0.21 of its potential returns per unit of risk. Atco Mining is currently generating about -0.01 per unit of risk. If you would invest 3,525 in Flex on August 29, 2024 and sell it today you would earn a total of 467.00 from holding Flex or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flex vs. Atco Mining
Performance |
| Timeline |
| Flex |
| Atco Mining |
Flex and Atco Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex and Atco Mining
The main advantage of trading using opposite Flex and Atco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex position performs unexpectedly, Atco Mining 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 Atco Mining will offset losses from the drop in Atco Mining's long position.The idea behind Flex and Atco Mining 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.| Atco Mining vs. Copa Holdings SA | Atco Mining vs. United Airlines Holdings | Atco Mining vs. Delta Air Lines | Atco Mining vs. SkyWest |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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