Correlation Between Alfa Laval and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Alfa Laval and Atlas Copco 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 Alfa Laval and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Laval AB and Atlas Copco AB, you can compare the effects of market volatilities on Alfa Laval and Atlas Copco 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 Alfa Laval with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Laval and Atlas Copco.
Diversification Opportunities for Alfa Laval and Atlas Copco
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alfa and Atlas is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Laval AB and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB and Alfa Laval 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 Alfa Laval AB are associated (or correlated) with Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Alfa Laval i.e., Alfa Laval and Atlas Copco go up and down completely randomly.
Pair Corralation between Alfa Laval and Atlas Copco
Assuming the 90 days trading horizon Alfa Laval AB is expected to generate 0.95 times more return on investment than Atlas Copco. However, Alfa Laval AB is 1.05 times less risky than Atlas Copco. It trades about -0.01 of its potential returns per unit of risk. Atlas Copco AB is currently generating about -0.1 per unit of risk. If you would invest 47,760 in Alfa Laval AB on August 25, 2024 and sell it today you would lose (220.00) from holding Alfa Laval AB or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Laval AB vs. Atlas Copco AB
Performance |
| Timeline |
| Alfa Laval AB |
| Atlas Copco AB |
Alfa Laval and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Laval and Atlas Copco
The main advantage of trading using opposite Alfa Laval and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Laval position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| Alfa Laval vs. Addtech AB | Alfa Laval vs. Teqnion AB | Alfa Laval vs. Vitec Software Group | Alfa Laval vs. Lagercrantz Group AB |
| Atlas Copco vs. Sandvik AB | Atlas Copco vs. AB SKF | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. ASSA ABLOY AB |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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