Correlation Between Atlas Copco and Ballard Power
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Ballard Power 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 Ballard Power 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 Ballard Power Systems, you can compare the effects of market volatilities on Atlas Copco and Ballard Power 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 Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Ballard Power.
Diversification Opportunities for Atlas Copco and Ballard Power
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Atlas and Ballard is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco A and Ballard Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballard Power Systems 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 Ballard Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballard Power Systems has no effect on the direction of Atlas Copco i.e., Atlas Copco and Ballard Power go up and down completely randomly.
Pair Corralation between Atlas Copco and Ballard Power
Assuming the 90 days horizon Atlas Copco A is expected to generate 0.5 times more return on investment than Ballard Power. However, Atlas Copco A is 2.0 times less risky than Ballard Power. It trades about -0.01 of its potential returns per unit of risk. Ballard Power Systems is currently generating about -0.09 per unit of risk. If you would invest 1,557 in Atlas Copco A on September 3, 2024 and sell it today you would lose (97.00) from holding Atlas Copco A or give up 6.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco A vs. Ballard Power Systems
Performance |
| Timeline |
| Atlas Copco A |
| Ballard Power Systems |
Atlas Copco and Ballard Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Ballard Power
The main advantage of trading using opposite Atlas Copco and Ballard Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Ballard Power 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 Ballard Power will offset losses from the drop in Ballard Power's long position.| Atlas Copco vs. LG Electronics | Atlas Copco vs. Applied Materials | Atlas Copco vs. Goodyear Tire Rubber | Atlas Copco vs. UET United Electronic |
| Ballard Power vs. SIEMENS AG SP | Ballard Power vs. Siemens Aktiengesellschaft | Ballard Power vs. Siemens Aktiengesellschaft | Ballard Power 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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