Correlation Between Atlas Copco and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Sandvik 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 Sandvik 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 Sandvik AB, you can compare the effects of market volatilities on Atlas Copco and Sandvik 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 Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Sandvik AB.
Diversification Opportunities for Atlas Copco and Sandvik AB
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Atlas and Sandvik is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Sandvik AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik 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 Sandvik AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandvik AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Sandvik AB go up and down completely randomly.
Pair Corralation between Atlas Copco and Sandvik AB
Assuming the 90 days trading horizon Atlas Copco AB is expected to generate 1.01 times more return on investment than Sandvik AB. However, Atlas Copco is 1.01 times more volatile than Sandvik AB. It trades about -0.14 of its potential returns per unit of risk. Sandvik AB is currently generating about -0.19 per unit of risk. If you would invest 18,175 in Atlas Copco AB on August 27, 2024 and sell it today you would lose (760.00) from holding Atlas Copco AB or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Sandvik AB
Performance |
| Timeline |
| Atlas Copco AB |
| Sandvik AB |
Atlas Copco and Sandvik AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Sandvik AB
The main advantage of trading using opposite Atlas Copco and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Sandvik 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 Sandvik AB will offset losses from the drop in Sandvik 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 |
| Sandvik AB vs. AB SKF | Sandvik AB vs. Alfa Laval AB | Sandvik AB vs. Atlas Copco AB | Sandvik AB vs. Boliden 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.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |