Correlation Between ATMA Participaes and Cincinnati Financial

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

By analyzing existing cross correlation between ATMA Participaes SA and Cincinnati Financial, you can compare the effects of market volatilities on ATMA Participaes and Cincinnati Financial 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 ATMA Participaes with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATMA Participaes and Cincinnati Financial.

Diversification Opportunities for ATMA Participaes and Cincinnati Financial

-0.48

Correlation Coefficient

ATMA Participaes  Cincinnati Financial

Very good diversification

The 3 months correlation between ATMA and Cincinnati is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ATMA Participaes SA and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and ATMA Participaes 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 ATMA Participaes SA are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial has no effect on the direction of ATMA Participaes i.e., ATMA Participaes and Cincinnati Financial go up and down completely randomly.

Pair Corralation between ATMA Participaes and Cincinnati Financial

Assuming the 90 days trading horizon ATMA Participaes is expected to generate 3.49 times less return on investment than Cincinnati Financial. In addition to that, ATMA Participaes is 14.68 times more volatile than Cincinnati Financial. It trades about 0.0 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.13 per unit of volatility. If you would invest  40,499  in Cincinnati Financial on April 24, 2025 and sell it today you would earn a total of  955.00  from holding Cincinnati Financial or generate 2.36% return on investment over 90 days.

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

ATMA Participaes SA  vs.  Cincinnati Financial

ATMA Participaes

Risk-Adjusted Performance

Very Weak

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

Cincinnati Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cincinnati Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATMA Participaes and Cincinnati Financial

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

The idea behind ATMA Participaes SA and Cincinnati Financial 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.