Correlation Between Atlas Copco and Hirata
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Hirata 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 Atlas Copco and Hirata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Copco A and Hirata, you can compare the effects of market volatilities on Atlas Copco and Hirata 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 Atlas Copco with a short position of Hirata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Hirata.
Diversification Opportunities for Atlas Copco and Hirata
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Atlas and Hirata is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco A and Hirata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hirata and Atlas Copco 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 Atlas Copco A are associated (or correlated) with Hirata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hirata has no effect on the direction of Atlas Copco i.e., Atlas Copco and Hirata go up and down completely randomly.
Pair Corralation between Atlas Copco and Hirata
Assuming the 90 days horizon Atlas Copco A is expected to generate 1.29 times more return on investment than Hirata. However, Atlas Copco is 1.29 times more volatile than Hirata. It trades about 0.03 of its potential returns per unit of risk. Hirata is currently generating about -0.01 per unit of risk. If you would invest 1,298 in Atlas Copco A on September 14, 2024 and sell it today you would earn a total of 222.00 from holding Atlas Copco A or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco A vs. Hirata
Performance |
| Timeline |
| Atlas Copco A |
| Hirata |
Atlas Copco and Hirata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Hirata
The main advantage of trading using opposite Atlas Copco and Hirata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Hirata 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 Hirata will offset losses from the drop in Hirata's long position.| Atlas Copco vs. Siemens Aktiengesellschaft | Atlas Copco vs. Siemens Aktiengesellschaft | Atlas Copco vs. Schneider Electric SE | Atlas Copco vs. RATIONAL Aktiengesellschaft |
| Hirata vs. SIDETRADE EO 1 | Hirata vs. FAST RETAIL ADR | Hirata vs. TRADEDOUBLER AB SK | Hirata vs. The Trade Desk |
Check out your portfolio center.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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