Correlation Between Southern Company and Atco

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

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

Diversification Opportunities for Southern Company and Atco

-0.31

Correlation Coefficient

Southern Company  Atco

Very good diversification

The 3 months correlation between Southern and Atco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Southern Company Series and Atco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco and Southern Company 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 Southern Company Series are associated (or correlated) with Atco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco has no effect on the direction of Southern Company i.e., Southern Company and Atco go up and down completely randomly.

Pair Corralation between Southern Company and Atco

Given the investment horizon of 90 days Southern Company Series is expected to generate 0.58 times more return on investment than Atco. However, Southern Company Series is 1.73 times less risky than Atco. It trades about 0.11 of its potential returns per unit of risk. Atco is currently generating about 0.01 per unit of risk. If you would invest  1,724  in Southern Company Series on May 4, 2025 and sell it today you would earn a total of  79.00  from holding Southern Company Series or generate 4.58% return on investment over 90 days.

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

Southern Company Series  vs.  Atco

Southern Company

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Company Series are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, Southern Company is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Atco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Atco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Southern Company and Atco

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

The idea behind Southern Company Series and Atco 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 Commodity Directory module to find actively traded commodities issued by global exchanges.