Correlation Between Ondo and ATP

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

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

Diversification Opportunities for Ondo and ATP

0.61

Correlation Coefficient

Ondo  ATP

Poor diversification

The 3 months correlation between Ondo and ATP is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ondo and ATP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATP and Ondo 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 Ondo are associated (or correlated) with ATP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATP has no effect on the direction of Ondo i.e., Ondo and ATP go up and down completely randomly.

Pair Corralation between Ondo and ATP

Assuming the 90 days trading horizon Ondo is expected to under-perform the ATP. But the crypto coin apears to be less risky and, when comparing its historical volatility, Ondo is 1.01 times less risky than ATP. The crypto coin trades about -0.01 of its potential returns per unit of risk. The ATP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in ATP on March 2, 2025 and sell it today you would earn a total of  0.00  from holding ATP or generate 10.0% return on investment over 90 days.

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

Ondo  vs.  ATP

Ondo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ondo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ondo is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ATP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ATP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ondo and ATP

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

The idea behind Ondo and ATP 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.