Correlation Between Atlas Copco and Svenska Handelsbanken
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Svenska Handelsbanken 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 Svenska Handelsbanken 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 Svenska Handelsbanken AB, you can compare the effects of market volatilities on Atlas Copco and Svenska Handelsbanken 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 Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Svenska Handelsbanken.
Diversification Opportunities for Atlas Copco and Svenska Handelsbanken
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Atlas and Svenska is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Svenska Handelsbanken AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken 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 Svenska Handelsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Handelsbanken has no effect on the direction of Atlas Copco i.e., Atlas Copco and Svenska Handelsbanken go up and down completely randomly.
Pair Corralation between Atlas Copco and Svenska Handelsbanken
Assuming the 90 days trading horizon Atlas Copco AB is expected to generate 1.08 times more return on investment than Svenska Handelsbanken. However, Atlas Copco is 1.08 times more volatile than Svenska Handelsbanken AB. It trades about 0.04 of its potential returns per unit of risk. Svenska Handelsbanken AB is currently generating about 0.03 per unit of risk. If you would invest 12,919 in Atlas Copco AB on August 24, 2024 and sell it today you would earn a total of 4,351 from holding Atlas Copco AB or generate 33.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Svenska Handelsbanken AB
Performance |
| Timeline |
| Atlas Copco AB |
| Svenska Handelsbanken |
Atlas Copco and Svenska Handelsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Svenska Handelsbanken
The main advantage of trading using opposite Atlas Copco and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Svenska Handelsbanken 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 Svenska Handelsbanken will offset losses from the drop in Svenska Handelsbanken'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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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