Correlation Between Atlas Copco and Investor
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Investor 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 Investor 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 Investor AB ser, you can compare the effects of market volatilities on Atlas Copco and Investor 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 Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Investor.
Diversification Opportunities for Atlas Copco and Investor
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Atlas and Investor is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Investor AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB ser 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 Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB ser has no effect on the direction of Atlas Copco i.e., Atlas Copco and Investor go up and down completely randomly.
Pair Corralation between Atlas Copco and Investor
Assuming the 90 days trading horizon Atlas Copco AB is expected to under-perform the Investor. In addition to that, Atlas Copco is 1.75 times more volatile than Investor AB ser. It trades about -0.17 of its total potential returns per unit of risk. Investor AB ser is currently generating about -0.24 per unit of volatility. If you would invest 30,749 in Investor AB ser on August 29, 2024 and sell it today you would lose (1,269) from holding Investor AB ser or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Investor AB ser
Performance |
| Timeline |
| Atlas Copco AB |
| Investor AB ser |
Atlas Copco and Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Investor
The main advantage of trading using opposite Atlas Copco and Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Investor 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 Investor will offset losses from the drop in Investor's long position.| Atlas Copco vs. Sandvik AB | Atlas Copco vs. AB SKF | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. ASSA ABLOY AB |
| Investor vs. Norva24 Group AB | Investor vs. KABE Group AB | Investor vs. IAR Systems Group | Investor vs. Clinical Laserthermia Systems |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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