Correlation Between ATT and Nippon Telegraph

Can any of the company-specific risk be diversified away by investing in both ATT and Nippon Telegraph 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 ATT and Nippon Telegraph into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATT Inc and Nippon Telegraph Telephone, you can compare the effects of market volatilities on ATT and Nippon Telegraph 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 ATT with a short position of Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Nippon Telegraph.

Diversification Opportunities for ATT and Nippon Telegraph

-0.18

Correlation Coefficient

ATT  Nippon Telegraph

Good diversification

The 3 months correlation between ATT and Nippon is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Nippon Telegraph Telephone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph Tel and ATT 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 ATT Inc are associated (or correlated) with Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph Tel has no effect on the direction of ATT i.e., ATT and Nippon Telegraph go up and down completely randomly.

Pair Corralation between ATT and Nippon Telegraph

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.35 times more return on investment than Nippon Telegraph. However, ATT Inc is 2.83 times less risky than Nippon Telegraph. It trades about 0.46 of its potential returns per unit of risk. Nippon Telegraph Telephone is currently generating about -0.35 per unit of risk. If you would invest  1,631  in ATT Inc on February 21, 2024 and sell it today you would earn a total of  121.00  from holding ATT Inc or generate 7.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ATT Inc  vs.  Nippon Telegraph Telephone

ATT Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nippon Telegraph Tel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Telegraph Telephone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ATT and Nippon Telegraph

The main advantage of trading using opposite ATT and Nippon Telegraph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Nippon Telegraph 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 Nippon Telegraph will offset losses from the drop in Nippon Telegraph's long position.

The idea behind ATT Inc and Nippon Telegraph Telephone 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.