Correlation Between Atlas Copco and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Nel ASA 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 Nel ASA 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 Nel ASA, you can compare the effects of market volatilities on Atlas Copco and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Nel ASA.
Diversification Opportunities for Atlas Copco and Nel ASA
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Atlas and Nel is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco A and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Atlas Copco i.e., Atlas Copco and Nel ASA go up and down completely randomly.
Pair Corralation between Atlas Copco and Nel ASA
Assuming the 90 days horizon Atlas Copco A is expected to generate 0.62 times more return on investment than Nel ASA. However, Atlas Copco A is 1.62 times less risky than Nel ASA. It trades about 0.01 of its potential returns per unit of risk. Nel ASA is currently generating about -0.05 per unit of risk. If you would invest 1,485 in Atlas Copco A on September 4, 2024 and sell it today you would lose (35.00) from holding Atlas Copco A or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco A vs. Nel ASA
Performance |
| Timeline |
| Atlas Copco A |
| Nel ASA |
Atlas Copco and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Nel ASA
The main advantage of trading using opposite Atlas Copco and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| Atlas Copco vs. SIEMENS AG SP | Atlas Copco vs. Siemens Aktiengesellschaft | Atlas Copco vs. Siemens Aktiengesellschaft | Atlas Copco vs. Otis Worldwide Corp |
| Nel ASA vs. SIEMENS AG SP | Nel ASA vs. Siemens Aktiengesellschaft | Nel ASA vs. Siemens Aktiengesellschaft | Nel ASA vs. Atlas Copco A |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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