Correlation Between ATT and Rems Real

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

By analyzing existing cross correlation between ATT Inc and Rems Real Estate, you can compare the effects of market volatilities on ATT and Rems Real 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 Rems Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Rems Real.

Diversification Opportunities for ATT and Rems Real

0.1

Correlation Coefficient

ATT  Rems Real

Average diversification

The 3 months correlation between ATT and Rems is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Rems Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rems Real Estate 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 Rems Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rems Real Estate has no effect on the direction of ATT i.e., ATT and Rems Real go up and down completely randomly.

Pair Corralation between ATT and Rems Real

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Rems Real. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.56 times less risky than Rems Real. The stock trades about -0.17 of its potential returns per unit of risk. The Rems Real Estate is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  960.00  in Rems Real Estate on January 19, 2024 and sell it today you would lose (19.00) from holding Rems Real Estate or give up 1.98% of portfolio value over 90 days.

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

ATT Inc  vs.  Rems Real Estate

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Rems Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rems Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rems Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATT and Rems Real

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

The idea behind ATT Inc and Rems Real Estate 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.