Correlation Between Aluminumof China and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Atlas Copco A, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Atlas Copco.
Diversification Opportunities for Aluminumof China and Atlas Copco
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aluminumof and Atlas is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Atlas Copco A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco A and Aluminumof China 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 Aluminum of 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 A has no effect on the direction of Aluminumof China i.e., Aluminumof China and Atlas Copco go up and down completely randomly.
Pair Corralation between Aluminumof China and Atlas Copco
Assuming the 90 days horizon Aluminum of is expected to generate 0.92 times more return on investment than Atlas Copco. However, Aluminum of is 1.08 times less risky than Atlas Copco. It trades about 0.17 of its potential returns per unit of risk. Atlas Copco A is currently generating about 0.13 per unit of risk. If you would invest 54.00 in Aluminum of on November 3, 2024 and sell it today you would earn a total of 6.00 from holding Aluminum of or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. Atlas Copco A
Performance |
| Timeline |
| Aluminumof China |
| Atlas Copco A |
Aluminumof China and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Atlas Copco
The main advantage of trading using opposite Aluminumof China and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.| Aluminumof China vs. The Yokohama Rubber | Aluminumof China vs. Siamgas And Petrochemicals | Aluminumof China vs. Reinsurance Group of | Aluminumof China vs. VIENNA INSURANCE GR |
| Atlas Copco vs. Melco Resorts Entertainment | Atlas Copco vs. SALESFORCE INC CDR | Atlas Copco vs. BOS BETTER ONLINE | Atlas Copco vs. Lamar Advertising |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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