Correlation Between Atlas Technical and Api GroupCorp

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

By analyzing existing cross correlation between Atlas Technical Consultants and Api GroupCorp, you can compare the effects of market volatilities on Atlas Technical and Api GroupCorp 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 Atlas Technical with a short position of Api GroupCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Technical and Api GroupCorp.

Diversification Opportunities for Atlas Technical and Api GroupCorp

0.75

Correlation Coefficient

Atlas Technical  Api GroupCorp

Poor diversification

The 3 months correlation between Atlas and Api is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Technical Consultants and Api GroupCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Api GroupCorp and Atlas Technical 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 Atlas Technical Consultants are associated (or correlated) with Api GroupCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Api GroupCorp has no effect on the direction of Atlas Technical i.e., Atlas Technical and Api GroupCorp go up and down completely randomly.

Pair Corralation between Atlas Technical and Api GroupCorp

Given the investment horizon of 90 days Atlas Technical Consultants is expected to generate 4.25 times more return on investment than Api GroupCorp. However, Atlas Technical is 4.25 times more volatile than Api GroupCorp. It trades about 0.03 of its potential returns per unit of risk. Api GroupCorp is currently generating about 0.09 per unit of risk. If you would invest  1,235  in Atlas Technical Consultants on January 25, 2024 and sell it today you would lose (10.00) from holding Atlas Technical Consultants or give up 0.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	48.58%
Values	Daily Returns

Atlas Technical Consultants  vs.  Api GroupCorp

Atlas Technical Cons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Technical Consultants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Atlas Technical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Api GroupCorp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Api GroupCorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Api GroupCorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Technical and Api GroupCorp

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

The idea behind Atlas Technical Consultants and Api GroupCorp 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.