Correlation Between Atlas Copco and Boliden AB
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Boliden AB 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 Boliden AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Copco AB and Boliden AB, you can compare the effects of market volatilities on Atlas Copco and Boliden AB 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 Boliden AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Boliden AB.
Diversification Opportunities for Atlas Copco and Boliden AB
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atlas and Boliden is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Boliden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB 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 AB are associated (or correlated) with Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Boliden AB go up and down completely randomly.
Pair Corralation between Atlas Copco and Boliden AB
Assuming the 90 days trading horizon Atlas Copco is expected to generate 1.26 times less return on investment than Boliden AB. But when comparing it to its historical volatility, Atlas Copco AB is 1.79 times less risky than Boliden AB. It trades about 0.63 of its potential returns per unit of risk. Boliden AB is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 30,820 in Boliden AB on October 23, 2024 and sell it today you would earn a total of 4,040 from holding Boliden AB or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Boliden AB
Performance |
| Timeline |
| Atlas Copco AB |
| Boliden AB |
Atlas Copco and Boliden AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Boliden AB
The main advantage of trading using opposite Atlas Copco and Boliden AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Boliden AB 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 Boliden AB will offset losses from the drop in Boliden AB's long position.| Atlas Copco vs. Sandvik AB | Atlas Copco vs. ASSA ABLOY AB | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. AB SKF |
| Boliden AB vs. Sandvik AB | Boliden AB vs. AB SKF | Boliden AB vs. Alfa Laval AB | Boliden AB vs. AB Electrolux |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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