Correlation Between First International and Atreyu Capital

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

By analyzing existing cross correlation between First International Bank and Atreyu Capital Markets, you can compare the effects of market volatilities on First International and Atreyu Capital 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 First International with a short position of Atreyu Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Atreyu Capital.

Diversification Opportunities for First International and Atreyu Capital

0.53

Correlation Coefficient

First International  Atreyu Capital

Very weak diversification

The 3 months correlation between First and Atreyu is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Atreyu Capital Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atreyu Capital Markets and First International 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 First International Bank are associated (or correlated) with Atreyu Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atreyu Capital Markets has no effect on the direction of First International i.e., First International and Atreyu Capital go up and down completely randomly.

Pair Corralation between First International and Atreyu Capital

Assuming the 90 days trading horizon First International is expected to generate 1.68 times less return on investment than Atreyu Capital. But when comparing it to its historical volatility, First International Bank is 1.01 times less risky than Atreyu Capital. It trades about 0.03 of its potential returns per unit of risk. Atreyu Capital Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  414,624  in Atreyu Capital Markets on February 14, 2024 and sell it today you would earn a total of  109,776  from holding Atreyu Capital Markets or generate 26.48% return on investment over 90 days.

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

First International Bank  vs.  Atreyu Capital Markets

First International Bank

Risk-Adjusted Performance

6 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First International Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First International may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Atreyu Capital Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atreyu Capital Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Atreyu Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First International and Atreyu Capital

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

The idea behind First International Bank and Atreyu Capital Markets 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.