Correlation Between MKS Instruments and Atlantic American

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

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

Diversification Opportunities for MKS Instruments and Atlantic American

0.83

Correlation Coefficient

MKS Instruments  Atlantic American

Very poor diversification

The 3 months correlation between MKS and Atlantic is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MKS Instruments and Atlantic American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic American and MKS Instruments 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 MKS Instruments are associated (or correlated) with Atlantic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic American has no effect on the direction of MKS Instruments i.e., MKS Instruments and Atlantic American go up and down completely randomly.

Pair Corralation between MKS Instruments and Atlantic American

Given the investment horizon of 90 days MKS Instruments is expected to generate 1.4 times less return on investment than Atlantic American. But when comparing it to its historical volatility, MKS Instruments is 1.26 times less risky than Atlantic American. It trades about 0.15 of its potential returns per unit of risk. Atlantic American is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  169.00  in Atlantic American on May 7, 2025 and sell it today you would earn a total of  66.00  from holding Atlantic American or generate 39.05% return on investment over 90 days.

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

MKS Instruments  vs.  Atlantic American

MKS Instruments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MKS Instruments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, MKS Instruments demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Atlantic American

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic American are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Atlantic American exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MKS Instruments and Atlantic American

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

The idea behind MKS Instruments and Atlantic American 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..