Correlation Between ATAI Life and Euro Tech

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

By analyzing existing cross correlation between ATAI Life Sciences and Euro Tech Holdings, you can compare the effects of market volatilities on ATAI Life and Euro Tech 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 ATAI Life with a short position of Euro Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATAI Life and Euro Tech.

Diversification Opportunities for ATAI Life and Euro Tech

0.46

Correlation Coefficient

ATAI Life  Euro Tech

Very weak diversification

The 3 months correlation between ATAI and Euro is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ATAI Life Sciences and Euro Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Tech Holdings and ATAI Life 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 ATAI Life Sciences are associated (or correlated) with Euro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Tech Holdings has no effect on the direction of ATAI Life i.e., ATAI Life and Euro Tech go up and down completely randomly.

Pair Corralation between ATAI Life and Euro Tech

Given the investment horizon of 90 days ATAI Life Sciences is expected to generate 3.01 times more return on investment than Euro Tech. However, ATAI Life is 3.01 times more volatile than Euro Tech Holdings. It trades about 0.14 of its potential returns per unit of risk. Euro Tech Holdings is currently generating about 0.17 per unit of risk. If you would invest  166.00  in ATAI Life Sciences on January 25, 2024 and sell it today you would earn a total of  31.00  from holding ATAI Life Sciences or generate 18.67% return on investment over 90 days.

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

ATAI Life Sciences  vs.  Euro Tech Holdings

ATAI Life Sciences

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATAI Life Sciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, ATAI Life demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Euro Tech Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Euro Tech Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Euro Tech may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with ATAI Life and Euro Tech

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

The idea behind ATAI Life Sciences and Euro Tech Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.