Correlation Between Atlas Copco and Audientes
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Audientes 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 Audientes 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 Audientes AS, you can compare the effects of market volatilities on Atlas Copco and Audientes 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 Audientes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Audientes.
Diversification Opportunities for Atlas Copco and Audientes
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Atlas and Audientes is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Audientes AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audientes AS 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 Audientes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audientes AS has no effect on the direction of Atlas Copco i.e., Atlas Copco and Audientes go up and down completely randomly.
Pair Corralation between Atlas Copco and Audientes
Assuming the 90 days trading horizon Atlas Copco AB is expected to under-perform the Audientes. But the stock apears to be less risky and, when comparing its historical volatility, Atlas Copco AB is 8.78 times less risky than Audientes. The stock trades about 0.0 of its potential returns per unit of risk. The Audientes AS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.52 in Audientes AS on September 1, 2024 and sell it today you would earn a total of 0.70 from holding Audientes AS or generate 46.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Atlas Copco AB vs. Audientes AS
Performance |
| Timeline |
| Atlas Copco AB |
| Audientes AS |
Atlas Copco and Audientes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Audientes
The main advantage of trading using opposite Atlas Copco and Audientes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Audientes 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 Audientes will offset losses from the drop in Audientes' long position.| Atlas Copco vs. AB SKF | Atlas Copco vs. Sandvik AB | Atlas Copco vs. Husqvarna AB | Atlas Copco vs. Skanska AB |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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