Correlation Between Basic Materials and ATMA Participaes
Can any of the company-specific risk be diversified away by investing in both Basic Materials 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 Basic Materials and ATMA Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and ATMA Participaes SA, you can compare the effects of market volatilities on Basic Materials 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 Basic Materials with a short position of ATMA Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and ATMA Participaes.
Diversification Opportunities for Basic Materials and ATMA Participaes
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Basic and ATMA is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and ATMA Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMA Participaes and Basic Materials 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 Basic Materials 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 Basic Materials i.e., Basic Materials and ATMA Participaes go up and down completely randomly.
Pair Corralation between Basic Materials and ATMA Participaes
Assuming the 90 days trading horizon Basic Materials is expected to generate 0.41 times more return on investment than ATMA Participaes. However, Basic Materials is 2.44 times less risky than ATMA Participaes. It trades about 0.02 of its potential returns per unit of risk. ATMA Participaes SA is currently generating about -0.11 per unit of risk. If you would invest 575,417 in Basic Materials on August 30, 2024 and sell it today you would earn a total of 1,703 from holding Basic Materials or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Basic Materials vs. ATMA Participaes SA
Performance |
| Timeline |
Basic Materials and ATMA Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
ATMA Participaes SA
Pair trading matchups for ATMA Participaes
Pair Trading with Basic Materials and ATMA Participaes
The main advantage of trading using opposite Basic Materials and ATMA Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials 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.| Basic Materials vs. United Rentals | Basic Materials vs. Livetech da Bahia | Basic Materials vs. Telecomunicaes Brasileiras SA | Basic Materials vs. Charter Communications |
| ATMA Participaes vs. Triunfo Participaes e | ATMA Participaes vs. Allpark Empreendimentos Participaes | ATMA Participaes vs. Azevedo Travassos SA | ATMA Participaes vs. Azevedo Travassos SA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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