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 ADR30, 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
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atlas and NEL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco A and NEL ASA ADR30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEL ASA ADR30 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 ADR30 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 0.58 times more return on investment than NEL ASA. However, Atlas Copco A is 1.71 times less risky than NEL ASA. It trades about 0.03 of its potential returns per unit of risk. NEL ASA ADR30 is currently generating about -0.03 per unit of risk. If you would invest 1,063 in Atlas Copco A on September 27, 2024 and sell it today you would earn a total of 377.00 from holding Atlas Copco A or generate 35.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco A vs. NEL ASA ADR30
Performance |
| Timeline |
| Atlas Copco A |
| NEL ASA ADR30 |
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. Schneider Electric SE | Atlas Copco vs. RATIONAL Aktiengesellschaft |
| NEL ASA vs. SIEMENS AG SP | NEL ASA vs. Siemens Aktiengesellschaft | NEL ASA vs. Schneider Electric SE | 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |