Correlation Between Atlas Copco and Ctek AB
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Ctek 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 Ctek 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 Ctek AB, you can compare the effects of market volatilities on Atlas Copco and Ctek 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 Ctek AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Ctek AB.
Diversification Opportunities for Atlas Copco and Ctek AB
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Atlas and Ctek is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Ctek AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ctek 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 Ctek AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ctek AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Ctek AB go up and down completely randomly.
Pair Corralation between Atlas Copco and Ctek AB
Assuming the 90 days trading horizon Atlas Copco AB is expected to generate 0.54 times more return on investment than Ctek AB. However, Atlas Copco AB is 1.86 times less risky than Ctek AB. It trades about 0.03 of its potential returns per unit of risk. Ctek AB is currently generating about -0.01 per unit of risk. If you would invest 15,585 in Atlas Copco AB on August 31, 2024 and sell it today you would earn a total of 1,830 from holding Atlas Copco AB or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Ctek AB
Performance |
| Timeline |
| Atlas Copco AB |
| Ctek AB |
Atlas Copco and Ctek AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Ctek AB
The main advantage of trading using opposite Atlas Copco and Ctek AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Ctek 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 Ctek AB will offset losses from the drop in Ctek 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 |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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