Correlation Between Electrolux and ATA Creativity

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

By analyzing existing cross correlation between Electrolux AB Class and ATA Creativity Global, you can compare the effects of market volatilities on Electrolux and ATA Creativity 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 Electrolux with a short position of ATA Creativity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrolux and ATA Creativity.

Diversification Opportunities for Electrolux and ATA Creativity

-0.16

Correlation Coefficient

Electrolux  ATA Creativity

Good diversification

The 3 months correlation between Electrolux and ATA is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Electrolux AB Class and ATA Creativity Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATA Creativity Global and Electrolux 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 Electrolux AB Class are associated (or correlated) with ATA Creativity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATA Creativity Global has no effect on the direction of Electrolux i.e., Electrolux and ATA Creativity go up and down completely randomly.

Pair Corralation between Electrolux and ATA Creativity

Assuming the 90 days horizon Electrolux AB Class is expected to generate 0.55 times more return on investment than ATA Creativity. However, Electrolux AB Class is 1.83 times less risky than ATA Creativity. It trades about 0.08 of its potential returns per unit of risk. ATA Creativity Global is currently generating about -0.12 per unit of risk. If you would invest  1,693  in Electrolux AB Class on March 4, 2024 and sell it today you would earn a total of  207.00  from holding Electrolux AB Class or generate 12.23% return on investment over 90 days.

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

Electrolux AB Class  vs.  ATA Creativity Global

Electrolux AB Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Electrolux AB Class are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Electrolux showed solid returns over the last few months and may actually be approaching a breakup point.

ATA Creativity Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Electrolux and ATA Creativity

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

The idea behind Electrolux AB Class and ATA Creativity Global 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.